In the In the Estate of William Thompson Bell, a September 15, 2021 opinion from the Seventh District Court of Appeals of Texas at Amarillo, the Texas appellate court reversed an order removing executors of a Texas estate because of a lack of sufficient findings supporting removal in the trial court’s order.
The Facts of In the Estate Of Bell
Decedent, William Thompson Bell, died on July 28, 2017 with an estate valued in excess of $12.5 million. Bell was the founder and majority shareholder of WTBI, a Texas corporation.
Bell was survived by three of his five children, Sharon, Thomas, and Elaine. Bell’s will was admitted to probate and Sharon and Vincent were appointed as co-executors in November of 2017.
Sharon and Vincent began administering the estate but quickly encountered difficulties collecting information regarding Bell’s WTBI stock and patents. They filed several motions requesting more time to complete the inventory of Bell’s estate, partly due to pending litigation between WTBI and Hunting Titan Ltd./Hunting Titan, Inc. regarding patent rights that was hindering their ability to secure information required to value the patent assets. The trial court extended the deadline to file the inventory to July 15, 2020.
Frustrated with the length of time it was taking to probate the estate, Elaine and other beneficiaries filed to remove Sharon and Vincent as co-executors of the estate. The beneficiaries objected to Sharon and Vincent’s attempts to recover Bell’s interest in the patents and to secure a valuation of the WTBI stock, and expressed a desire to quickly sell their shares of stock.
The beneficiaries also filed a motion to show cause, asking the court to compel Sharon and Vincent to prepare and file the estate’s inventory. At the hearing on the motion to show cause, the trial court entered an order removing Sharon and Vincent as independent co-executors and appointing a successor dependent administrator. The only finding in the court’s order was that Sharon and Vincent’s “excessive spending of estate assets constitutes mismanagement.”
Sharon and Vincent appealed, seeking reinstatement of their positions as co-executors of Bell’s estate.
When Can You Remove an Independent Executor of a Texas Estate?
Sections 404.003 and 404.0035 of the Texas Estates Code set forth the reasons an independent executor may be removed.
The probate court, on the court’s own motion or on the motion of any interested person, and without notice, may remove an independent executor appointed under this subtitle when:
(1) the independent executor cannot be served with notice or other processes because:
(A) the independent executor’s whereabouts are unknown;
(B) the independent executor is eluding service; or
(C) the independent executor is a nonresident of this state without a designated resident agent; or
(2) sufficient grounds appear to support a belief that the independent executor has misapplied or embezzled, or is about to misapply or embezzle, all or part of the property committed to the independent executor’s care.
(b) The probate court, on its own motion or on motion of any interested person, after the independent executor has been cited by personal service to answer at a time and place set in the notice, may remove an independent executor when:
(1) the independent executor fails to make an accounting which is required by law to be made;
(2) the independent executor is proved to have been guilty of gross misconduct or gross mismanagement in the performance of the independent executor’s duties;
(3) the independent executor becomes an incapacitated person, or is sentenced to the penitentiary, or from any other cause becomes legally incapacitated from properly performing the independent executor’s fiduciary duties; or
(4) the independent executor becomes incapable of properly performing the independent executor’s fiduciary duties due to a material conflict of interest.
What Is “Gross Misconduct” and “Gross Mismanagement” Of a Texas Estate?
Texas courts have previously held that “gross misconduct” and “gross mismanagement” included, at a minimum: (1) any willful omission to perform a legal duty; (2) any intentional commission of a wrongful act; and (3) any breach of a fiduciary duty that results in actual harm to a beneficiary’s interests. In the Estate of Miller, 243 S.W.3d 831, 840-41 (Tex. App.—Dallas 2008, no pet.) (citing Sammons v. Elder, 940 S.W.2d 276, 283 (Tex. App.—Waco 1997, writ denied)).
However, in Kappus v. Kappus, the Texas Supreme Court set forth an apparently less strict standard, stating the use of the adjective “gross,” which means “glaringly obvious” or “flagrant,” indicates that “something beyond ordinary misconduct and ordinary mismanagement is required to remove an independent executor.”
Here, the only finding made by the Texas trial court was that Sharon and Vincent’s “excessive spending of estate assets constitutes mismanagement.” The beneficiaries argued that the evidence presented to the trial court, despite the stated findings in the trial court’s removal order, supported removal, including:
- expenditures by Sharon and Vincent of over $180,000.00 over a span of nine months, just in attorney’s fees for one attorney;
- payment of $375,000.00 in tax liability after retaining H&R Block instead of a certified public accountant;
- nearly three years had passed since Bell died and two and a half years since Sharon and Vincent were appointed as co-executors, and only an interim inventory had been filed; and,
- Sharon testified she had been signing documents without reading them and Vincent suffered a brain injury and had some difficulty in answering certain questions.
Can a Court Remove an Executor In Texas Without Making Findings Of Fact?
No. If a Texas trial court enters an order removing an executor of an estate, the order must state the factual basis for doing so. Here, the Texas appellate court determined that the burden of showing gross mismanagement and misconduct on the part of the executors of the estate was not met, stating:
Based on the language of the trial court’s order, the only finding it made was that Sharon and Vincent’s “excessive spending of estate assets constitutes mismanagement.” It clearly did not find their actions to be “gross.” Nor did it make any findings regarding the adequacy or lack of an inventory. Thus, we are left with determining whether there were sufficient grounds to support a belief that Sharon and Vincent misapplied all or part of the property committed to their care. TEX. ESTATES CODE ANN. § 404.003(2). We agree with the beneficiaries and with the trial court that Sharon and Vincent spent significant funds from the estate paying attorneys for investigation that might not be relevant. We agree also that Sharon and Vincent have done little to administer the estate in the years in which they have been appointed. However, because under Kappus, any ground supporting removal must be “glaringly obvious” or “flagrant” and “something beyond ordinary misconduct and ordinary mismanagement” must be shown to support removal of an independent co-executor, we cannot find that burden was met here. Kappus, 284 S.W.3d at 836. We sustain Sharon and Vincent’s first issue.
Can the Texas Trial Court Remove an Executor At a Hearing On a Motion Where Removal Is Not Requested?
Yes, a Texas trial court can remove an executor on its own motion and authority if the proper grounds are presented.
The order removing Sharon and Vincent was on a Motion to Show Cause, where removal of the co-executors was not requested. Sharon and Vincent argued that the trial court could not order their removal because removal was not requested in the pleading.
The Texas appellate court overruled this argument, stating:
The motion to show cause in the record states as the basis for relief the failure of Sharon and Vincent to file an inventory. While we agree that the record indicates they did file an interim inventory in advance of the extended deadline in which to do so, we find that the trial court was within its power, on its own motion and authority, to remove them as co-executors if the proper grounds were supported. See TEX. ESTATES CODE ANN. §§ 404.003; 404.0035; In re Estate of Washington, 262 S.W.3d at 906. As such, we cannot agree with Sharon and Vincent’s argument that the trial court granted relief in excess of the beneficiaries’ pleadings. Accordingly, we overrule their second issue.
The order removing the executors was reversed, and the cause remanded for further proceedings. The takeaway here is that when requesting to remove an executor of a Texas estate, you must be sure that not only is the conduct of the executor “glaringly obvious” and “flagrant” misconduct or mismanagement, but that the trial court makes the requisite findings of fact in the order of removal. Here, the beneficiaries are now stuck dealing with co-executors who have done a questionable job of managing the estate, and are likely emboldened by the appellate court’s decision. For more on executors, read When Is Someone “Unsuitable” To Serve as Independent Executor Of a Texas Estate? and Texas Executor Breaches Fiduciary Duties In Making a Non-Pro Rata Distribution Of Assets and Failing To Disclose Material Facts.