In re Estate of Kappus,
242 S.W.3d 182 (Tex. App.—Tyler 2007),
reversed, Kappus v. Kappus,
284 S.W.3d 831 (2009).
Beneficiaries’ Mother (the testator’s ex-wife) moved to have
Independent Executor removed from office because he shared ownership of
certain estate property with his deceased brother and allegedly had a
conflict of interest with the beneficiaries. Mother argued that he could
not adequately represent the estate while seeking to retain his own
share of the property. The trial court denied the motion and the
appellate court reversed.
The court begin its analysis by explaining that great deference is given
to the testator’s choice of an independent executor. However, the named
executor may be removed for the reasons specified in Probate Code §
149C. In this case, the estate and the executor are in conflict
regarding a 4.86% interest in the property because both claim ownership
to this property. The court concluded that the existence of this
conflict requires the trial court to remove the executor.
Moral: Naming an executor who co-owns property with the testator is
problematic should a dispute over the amount each actually owns arises
after the testator’s death.
The trial court held that a testamentary trust was not created
because no steps had been taken to fund the trust. The appellate court
reversed. The court explained that the will left the residue of
Testator’s estate to a trust, the provisions of which were set forth in
the will. Under Probate Code § 37, title to property devised in a will
vests immediately in the beneficiaries upon the testator’s death. The
will contained nothing which would delay this vesting. Thus, the
property vested immediately in the trustee.
Note: The court went on to explain that although the trial court did not
reach the issue of removing the trustee from office under Property Code
§ 113.082, since the trust was actually created, it was an abuse of
discretion for the court not to remove the trustee from office for
having a conflict of interest (the trustee was personally claiming
ownership to a portion of the property claimed by the trust).
Moral: Unless the will provides otherwise, a testamentary trust is
created as of the date of the testator’s death.
The appellate court explained that “[w]hen the same person is named
as independent executor and as trustee of a testamentary trust,
acceptance of the position of trustee will be presumed from his or her
having acted as executor.” Kappus at 191. It appears that the court is
engrafting this as either an additional method of acceptance or as
coming within the acceptance methods specified in Probate Code §
112.009.
Moral: An executor who is also named as the trustee of a testamentary
trust must take clear action to reject the trusteeship if the executor
does not wish to serve in that capacity.