Opinion ID: 2037947
Heading Depth: 1
Heading Rank: 5

Heading: Reopening of Estate.

Text: Iowa Code section 633.489 provides: Upon the petition of any interested person, the court may, with such notice as it may prescribe, order an estate reopened if other property be discovered, if any necessary act remains unperformed, or for any other proper cause appearing to the court. It may reappoint the personal representative, or appoint another personal representative, to administer any additional property or to perform other such acts as may be deemed necessary. The provisions of law as to original administration shall apply, insofar as applicable, to accomplish the purpose for which the estate is reopened, but a claim which is already barred can, in no event, be asserted in the reopened administration. We focus our attention to that portion of section 633.489 which provides the court may reopen an estate for any other proper cause. We have concluded this provision should be read as permitting the district court to exercise discretion in considering a petition that alleges a cause for reopening other than the two causes specifically enumerated. In re Estate of Witzke, 359 N.W.2d 183, 185 (Iowa 1984). Before the Iowa Probate Code took effect in 1964, the law of Iowa permitted mistakes in settlements to be corrected. Iowa Code section 689.9 (1962) provided: Mistakes in settlements may be corrected in the probate court at any time before his final settlement and discharge, and after that time by equitable proceedings, on showing such grounds as will justify the interference of the court. Although in most cases where equity has granted relief under section 689.9 it was based on fraud, the statute clearly provides that equity may take jurisdiction where there are mistakes in the final report. Foley v. Engstrom, 247 Iowa 774, 782, 74 N.W.2d 673, 678 (1956). We believe equitable principles favor reopening this estate. In Iowa there is a clear public policy favoring statutory limitation of fiduciary and attorney fees for ordinary services performed in the administration of an estate. The bank served as executor of both the Donald R. Lynch and Kathryn C. Lynch estates, as well as trustee for the marital trust. The bank had complete information as to the assets of testamentary trust. Had the bank known that the trust assets were not subject to Iowa inheritance tax before the estate was closed, it would have reported the change to the court and requested a recalculation of fees. Reopening the estate to allow the court to recalculate the fees for ordinary services based upon the correct gross estate value does not deprive the bank of any fees rightfully owed to it. As suggested by counsel, Lynch is not trying to hold the bank liable for its mistake, but rather is trying to prevent the bank from profiting from a mistake. The district court concluded the value of the marital trust was required to be included in the probate inventory and its value considered in setting executor and attorney fees. The court cited Brown's Estate v. Hoge, 198 Iowa 373, 199 N.W. 320 (1924), as authority for calculating fees under the law as it exists at the time of distribution. The court stated: It was therefore an interpretation of section 450.3(4) applied to Kathryn's estate, after it had been closed, that resulted in the change in the probate inventory.... Given the law at the time the estate was closed, the defendant committed no errors and no proper cause to reopen exists. Because section 633.489 provides the court may reopen an estate for proper cause, we will not reverse the court's decision unless the court has abused its discretion. We will not find an abuse of discretion by the court unless it is shown that the discretion was exercised on grounds clearly untenable, or to an extent, clearly unreasonable. Richers v. Marsh & McLennan Group Assocs., 459 N.W.2d 478, 481 (Iowa 1990). An abuse of discretion may arise from an erroneous conclusion and judgment by the court. Id. A mistake in the court's allowance of fees may constitute proper cause for reopening an estate. Because the district court erroneously concluded the exclusion of marital trust assets by IDRF was a change in the law, we find the court's refusal to reopen the estate was an abuse of discretion. Proper cause for reopening the estate was established. We reverse the court's denial of the petition to reopen the Kathryn C. Lynch estate and remand for the purpose of reopening the estate to determine the authorized co-executor and attorney fees and to order appropriate relief. REVERSED AND REMANDED.