Opinion ID: 1986023
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Heading: Compensation and Retention of the Executor.

Text: The only remaining issue on the executor's appeal is his claim that he and his attorney are entitled to extraordinary fees. We think it makes sense to consider this claim with the contentions made in Dwight's cross-appeal that the executor should be removed or, alternatively, should be denied any fee. We begin with the question of whether Dennis should be removed as executor. At the hearing on the objections and in a subsequently filed motion for sanctions, Dwight requested that the court sanction Dennis by removing him from his position as executor or, alternatively, by denying any fees. In the court's ruling on Dwight's objections, the court denied any sanctions. A district court is allowed to exercise a large discretion in determining whether to remove an executor. In re Estate of Lininger, 230 Iowa 201, 205, 297 N.W. 310, 312 (1941); accord In re Estate of Lovell, 344 N.W.2d 576, 579 (Iowa Ct. App.1983). Accordingly, we will not interfere with the exercise of this discretion unless it has been abused. See In re Estate of Lininger, 230 Iowa at 205, 297 N.W. at 312. A fiduciary may be removed if he or she has mismanaged the estate [or] failed to perform any duty imposed by law. Iowa Code § 633.65. The burden to prove conduct sufficient for removal of the executor is upon the person seeking removal. See In re Estate of Atwood, 577 N.W.2d 60, 63 (Iowa Ct.App.1998). Here, Dwight claims that Dennis should be removed because he has failed in his statutory duty to render a fair and accurate accounting of the property of the estate. Iowa law requires an executor to set forth in his final report [a]n accounting of all property coming in the hands of the personal representative and a detailed accounting of all cash receipts and disbursements. Iowa Code § 633.477(9). It should go without saying that this accounting must be true and accurate. Moreover, the executor is a fiduciary. See id. § 633.3(17). As such, the executor has an obligation to treat the beneficiaries of a trust or estate impartially. See Restatement (Third) of Trusts § 183, at 149 (1992). Similarly, a fiduciary cannot use [his] position, directly or indirectly, for [his] own advantage or profit. Coster v. Crookham, 468 N.W.2d 802, 806 (Iowa 1991). With respect to the accounting rendered by the executor, the district court made the following findings, which were not challenged by the executor on appeal: The accounting made as a part of the Final Report is incomplete and lacks appropriate detail. Many of the receipts and disbursements are not adequately identified. Disbursements are made from the trust account, which appear to be unauthorized. These disbursements from the trust account could, however, be of little significance, if the intent is to close the trust forthwith, but, as mentioned earlier, the proposed accounting is incorrect, as to the share of Jane Ann Stout. The Iowa inheritance taxes were paid out of the estate. The Final Report and Accounting does not reflect each heirs [sic] liability for Iowa inheritance tax. Iowa inheritance tax is not an estate expense. Each share must be computed separately, and if paid out of the estate account, appropriate adjustments must be made to reflect the individual tax liability. (Emphasis added.) Coloring this conduct is the fact that the executor's payment of Jane Ann's share of the family corporation out of the trust account and his subsequent failure to adjust the distribution of the trust funds accordingly benefited the executor personally, and, coincidentally, his brothers. Because one-fourth of the trust funds used to pay Jane Ann were funds to which she was already entitled, the executor's use of these funds had the effect of increasing his and his brothers' distributions from the trust fund. A similar result occurred with respect to the executor's handling of the Iowa inheritance tax. Because Dennis inherited more property than did his siblings, he owed more than twice as much inheritance tax than they owed. [4] By using estate funds to pay these taxes and not adjusting the beneficiaries' distributive shares accordingly, Dennis benefited at the expense of the other heirs. Finally, in determining the distribution to be made to each beneficiary, Dennis clearly favored himself and his family ally, Douglas, by not accounting for the gifted property or the $24,000 note, yet making adjustments for Dwight's debt. At the hearing, Dennis explained his actions by asserting that he simply signed what his attorney had prepared. Even if this explanation is true, the attorney was chosen by Dennis, see Iowa Code § 633.82, and Dennis signed the various forms and filings stating that he had read them and that they were true and correct. He cannot now disclaim responsibility for his actions. See generally id. § 633.85 (discussing personal liability of fiduciary for acts or omission of agent). We think the trial court abused its discretion in failing to remove the executor. The executor, in breach of his duty of impartiality, clearly handled the estate in a manner that favored some beneficiaries over others. In addition, as the trial court found, the accounting was incomplete and showed unauthorized disbursements from both the trust account (payment of Jane Ann's share of Rutter's) and the estate account (payment of the beneficiaries' inheritance taxes). It is also significant that these disbursements were to Dennis's personal advantage. See In re Estate of Atwood, 577 N.W.2d at 63 (evidence the executor is using his or her position as a personal advantage may also serve as grounds for an executor's removal). In view of this conduct, the executor should not have been allowed to continue to administer this estate. See In re Estate of Jones, 492 N.W.2d 723, 726-27 (Iowa Ct. App.1992) (reversing trial court's refusal to remove executor where executor had used her position as conservator and executor to benefit her son who had divergent interests from the other beneficiaries); cf. In re Estate of Amick, 225 Iowa 829, 832, 281 N.W. 786, 788 (1938) (holding that inadvertent failure to include certain assets in the estate did not necessarily require removal of executors). Therefore, we reverse the trial court's ruling denying Dwight's request to remove the executor. This decision necessarily results in the removal of the attorney chosen by the executor as well. Our conclusion that the executor should be removed moots Dwight's alternative request that the executor should be denied any fee. That leaves only the claim for extraordinary fees. The probate court has considerable discretion in allowing attorneys' fees. See In re Estate of Bass v. Bass, 196 N.W.2d 433, 435 (Iowa 1972). For the same reasons justifying Dennis's removal as executor, we find no abuse of discretion in the trial court's denial of Dennis's request for extraordinary fees incurred by the executor and his attorney in defending against Dwight's objections. Cf. In re Estate of Pence, 511 N.W.2d 651, 652 (Iowa Ct.App.1993) (disallowing fees for attorney and special administrator incurred in litigating matters of personal interest between the heirs); In re Estate of Bolton, 403 N.W.2d 40, 47 (Iowa Ct.App. 1987) (holding attorney not entitled to extraordinary fees for advocating the position of one executor/beneficiary against that of another beneficiary/executor). Therefore, we affirm the trial court's fee award to the executor and attorney.