Making Sense of Trustee,
Guardianship and Executor Removal

Defining “The Big Three” Fiduciary Roles in Estate Planning

Let’s consider what us estate litigators like to call, “The Big Three,” or more precise, the fiduciary roles of executors, trustees, and guardians.

Executors (also known as personal representatives) settle probate estate matters for the deceased. Testators name executors in their wills, and probate courts likewise assign executors to estates absent testamentary documents. Executors settle the deceased’s debts, pay taxes owed, and release the rest of the estate’s assets and property to  beneficiaries and heirs.

Trustees are individuals or institutions that manage testamentary trusts (trusts starting after death) for designated beneficiaries. Many times the will’s executor serves as the trustee. These fiduciaries are the legal owners of estate assets, and the law tasks them with prudently protecting and investing property for heirs and beneficiaries.

Guardians take custody and care of a testator’s minor children or care for his incapacitated adult heirs after death. They serve as trustees of these estates until the children become adults or until adult heirs can care for themselves. Testators nominate guardians when planning their estates, and their wills often establish how guardians will manage assets left to beneficiaries and how they’ll disburse property when the guardianship ceases.

Breach of Trustee, Guardianship and Executor Duties

Fiduciary removal actions arise when executors, trustees and guardians betray their trust, loyalty and good will duties owed to the successors of a will.

Testamentary documents often define the grounds for fiduciary removal; but when absent, the courts will turn to Iowa probate codes and precedent case law to determine if executors, trustees and guardians have breached their legal duties.

Executor Duties and Breach.  Executors must make good faith attempts to settle estate debts and distribute what remains to beneficiaries promptly. They must further exercise reasonable care when administering estate assets and avoid conflicts of interest that could damage the successors’ inheritance.

Typical acts that call for an executor’s removal for breach of fiduciary duty include:

• Failure to account for estate assets.
• Refusal to carry out the provisions set in the will.
• Mixing estate assets with the executor’s personal assets.
• Settling estates slowly or late that results in property loss to heirs.

Trustee Duties and Breach. Trustees hold duties to exercise prudent care when investing in estate assets, and they must protect property from loss by not engaging in conflicts of interest. Fiduciaries in trustee roles further account for property, pay creditors, and ultimately distribute money assets to beneficiaries.

Typical acts that warrant a trustee’s removal for breach of fiduciary duty include:

• Failure to obey the terms in the trust.
• Mismanagement of investment funds or assets.
• Self dealing–using estate assets for the trustee’s own benefit.
• Engaging in criminals acts while performing trustee duties.

Guardianship Duties and Breach. Testamentary documents and judges assign guardians to maintain and preserve in good faith the property and assets of minor children and incapacitated adults. Guardians who breach their fiduciary duties may be personally liable to repay damages for estate property losses.

Typical acts that call for a guardian’s removal for breach of fiduciary duty include:

• Refusal to comply with a court-ordered accounting.
• Embezzlement or misappropriation of a minor’s estate property.
• Placing personal interests above the interests of successors.

If you suspect your executor, trustee or guardian has breached their fiduciary duty retain an estate dispute litigator at The Smith Law Firm to file removal and replacement proceedings immediately.

Removal in Fiduciary Litigation

Probate courts in Iowa will only remove executors, trustees or guardians who willfully or recklessly violate their fiduciary duties.

For example, losses to property arising from a good-faith investment of estate assets are not grounds for removal.

Only parties with an interest in the testamentary documents may petition the courts to have their fiduciaries removed and replaced.

Claimants in fiduciary litigation must discover and present evidence through depositions, expert witness testimony and formal accountings to prove significant breach of duty or intentional mismanagement of fiduciary assets took place.

If the claimants prevail, the courts will order fiduciary removal and name a successor.

Naming a New Fiduciary

When judges remove fiduciaries, the courts appoint someone else to assume their duties; however, some testamentary documents name alternate executors, trustees or guardians to take over should the testator’s first fiduciary fail to perform.

Probate codes in Iowa mandate who may serve as a successor when the courts remove fiduciaries. Surviving family members and relatives most times can succeed a fiduciary removal, but only if they’re qualified to take on the role.

Competent Estate Planning Avoids Removal

Fiduciaries should reduce their risk of removal by hiring seasoned attorneys to counsel them during estate planning and to look over their estate asset investments.

Doing so may identify possible conflicts of interest and warn about potential breach of care issues before they happen—valuable consultation that could save executors, trustees or guardians from incurring personal liability.

Yes. Once removed from their roles, trustees are personally liable for estate property losses they cause or for missing assets.

No. Executors must act in the best interests of legal of heirs and beneficiaries. This duty includes making fair and just property distributions to successors.

Guardianships over incapacitated adults last until death or until the individuals can care for themselves; guardianships over minors last until the child becomes an adult.