In what seems like an obvious result, a Texas appellate court, in Isaac v. Burnside, affirmed that an in terrorem clause was not triggered in a Texas probate dispute when an estate beneficiary sought reimbursement for expenses incurred for the testator’s funeral.
The Facts of Isaac v. Burnside
Constance Burnside, the surviving spouse of Ernest Burnside, filed a breach of fiduciary lawsuit against the independent executor of Ernest’s estate, Kenneth Isaac. Constance alleged that Isaac breached his fiduciary duty as executor by failing to give Burnside ½ of the money in Decedent’s bank accounts and by failing to pay Constance for expenses she incurred for Decedent’s funeral.
The trial court rendered judgment in Constance’s favor, finding:
- Isaac had a fiduciary duty as independent executor of the estate of Ernest Burnside (the “Estate”).
- A fiduciary/beneficiary relationship existed between Isaac, as independent executor of the Estate, and Burnside, as heir/beneficiary in the Decedent’s Last Will and Testament (the “Will”).
- Isaac breached his fiduciary duty as independent executor of the Estate by (1) failing to distribute to Burnside one-half of the money the Decedent owned in any bank account, (2) failing to reimburse Burnside for the Decedent’s funeral and burial expenses, and (3) failing to collect funds of the Estate that Isaac possessed and illegally took for himself.
- Burnside, as heir/beneficiary, suffered injury as a result of Isaac’s breach.
- Isaac profited from his breach of fiduciary duty as independent executor of the Estate.
- Isaac committed defalcation while acting in a fiduciary capacity by improperly and knowingly (1) disregarding the obligation to maintain accurate records of all expenses and receipts of the Estate, (2) disregarding the obligation to collect funds of the Estate that Isaac possessed for himself, and (3) failing to distribute funds to Burnside in accordance with the provisions of the Will.
- Isaac committed misapplication of fiduciary property by knowingly misapplying Estate funds while acting as a fiduciary in a manner that caused substantial loss to Burnside.
The trial court awarded Constance ½ of the money Decedent owned in any bank account, pursuant to Decedent’s bequest to Constance of “one-half of the money I own in any bank account,” and ordered reimbursement to Constance for Decedent’s funeral and burial expenses in the amount of $8,665.
The independent executor appealed.
Who Controls Disposition of Remains Under Texas Law?
One issue on appeal was that Constance’s claim for funeral expenses was barred because Texas Health and Safety Code § 711.002(h) and article 2.1 of the Will control the disposition of Decedent’s remains.
Section 711.002 of the Texas Health and Safety Code provides that a decedent’s instructions in a will have priority to govern the disposition of remains. Here, Decedent’s will directed the executor to “make all arrangements for my funeral in keeping with my beliefs and station in life.” The will also precluded decedent’s heirs from making funeral arrangements.
The court determined that decedent’s will did not bar reimbursement of funeral expenses. Though the Decedent directed that the independent executor make all the funeral arrangements, the Decedent did not state that only funeral expenses based on arrangements made by the independent executor should be paid. To the contrary, the Will also directed that funeral expenses be paid from the estate. Therefore, the court held that the will did not bar reimbursement for funeral expenses.
What Is an In Terrorem Clause In Texas?
An in terrorem clause in a Texas will or trust is a clause that voids a devise in favor of a person from bringing an action in court against the will or trust. We have written about in terrorem clauses in Texas (also called “forfeiture” and “no contest” clauses) here.
Seeking Reimbursement For Funeral Expenses Does Not Trigger an In Terrorem Clause In Texas
Independent executor Isaac also argued that by filing a claim for the reimbursement of funeral expenses, the surviving spouse triggered the in terrorem clause in the will. Isaac argued that the reimbursement claim seeks to invalidate the clause in the will that tasks the executor with making funeral arrangements. As discussed above, since the Will did not bar reimbursement of funeral expenses, the court quickly overruled this issue, holding that a beneficiary may seek reimbursement for funeral expenses without risking forfeiture of a bequest under a standard in terrorem clause in Texas.
The biggest takeaway from this case is to choose who you nominate to serve as your executor wisely. This executor seemed to take issue with distributing the estate according to the clear terms of the Decedent’s will, causing a lot of unnecessary litigation and expense.