When someone agrees to serve as executor of a loved one’s estate, they usually expect some paperwork and a few decisions about distributing assets. Most people don’t anticipate that years later they could lose their position, forfeit substantial compensation, and face allegations of serious misconduct. The role carries significant responsibilities that extend far beyond simply following instructions in a will.
Texas law allows estates to be administered independently—meaning without ongoing court supervision. This streamlined approach saves time and money compared to court-supervised administration. However, independent executors still owe substantial fiduciary duties to beneficiaries. When an executor’s handling of estate matters crosses certain lines, even an independent administration can result in removal proceedings.
What happens when an executor makes decisions that seem reasonable at the time but later prove costly to the estate? The case of Geeslin v. McElhenney, 788 S.W.2d 683 (Tex. App.—Austin 1990, no writ), provides an opportunity to examine just how demanding the executor’s role can be in Texas probate administration.
Facts & Procedural History
Thomas died in September 1983. He was survived by his second wife Sarah Ann and five children—one adopted daughter from his second marriage and four children from his first marriage to Ada. His will divided various property interests among Sarah Ann and the four children from his first marriage. The probate court admitted the will and appointed Geeslin as independent executor in November 1983.
For nearly five years, Geeslin administered the estate without court interference. Then in June 1988, the four children from the first marriage filed a motion seeking Geeslin’s removal as executor and requesting that he be denied any further commissions. They alleged multiple instances of what they characterized as “gross mismanagement” and “gross misconduct” in his handling of estate matters.
The allegations centered primarily on two areas. First, the children claimed Geeslin had mishandled the estate’s tax obligations. This resulted in substantial penalties and interest charges that could have been avoided. Second, they alleged he had improperly mixed estate funds with money from a pension plan that Thomas had established during his lifetime. This pension plan was administered by Geeslin and primarily benefited Sarah Ann, the surviving widow.
After an evidentiary hearing, the probate court agreed with the children. The court found that Geeslin’s handling of the tax matters constituted gross mismanagement or gross misconduct. It also found that his commingling of estate funds with pension plan assets amounted to similar misconduct. Beyond these two main issues, the court identified eleven other acts or omissions that collectively supported removal. The court removed Geeslin from his position and reduced his compensation from the full amount he had taken to just 2.5% of the gross estate. This required him to refund over $132,000 in commissions he had already received.
Geeslin appealed the removal order to the Court of Appeals in Austin.
Independent Administration in Texas Probate
Texas offers two primary methods for administering a decedent’s estate through the probate system. The traditional approach involves ongoing court supervision of the executor’s actions. Every significant decision requires court approval. Sales of property, distributions to beneficiaries, and payment of claims all need the probate judge’s authorization before the executor can act.
The alternative is independent administration under the Texas Estates Code. This method allows the executor to act without seeking court permission for routine estate matters. Independent administration moves faster because the executor doesn’t have to schedule hearings and wait for court orders. It costs less because attorneys don’t need to prepare motions and applications for every transaction.
Texas law strongly favors independent administration. The Legislature designed this approach to reduce the burden on courts and make estate settlement more efficient. When a will authorizes independent administration—or when all beneficiaries agree to it—courts readily approve this method. Most Texas estates that go through probate use independent administration rather than court-supervised administration.
This preference for independence creates a tension. Executors operate with minimal oversight. Yet they still owe stringent duties to beneficiaries. The question becomes: when should a court intervene in an independent administration to protect beneficiaries from an executor’s conduct?
Grounds for Removing an Independent Executor
Section 149C of the Texas Probate Code (now codified in the Texas Estates Code) establishes the standard for removing an independent executor. The court may remove an executor “on its own motion or on motion of any interested person” if the executor is “proved to have been guilty of gross misconduct or gross mismanagement in the performance of his duties.”
The Legislature added this provision in 1979. It was patterned after a similar section in the Uniform Probate Code. Before 1979, independent executors operated with even less court oversight. The addition of Section 149C reflected a legislative judgment that some safety valve was needed. Even independent executors should face potential removal for serious misconduct.
However, the statute uses deliberately high thresholds. It requires “gross misconduct” or “gross mismanagement” rather than simple negligence or poor judgment. The word “gross” matters. If ordinary negligence were enough to remove an executor, beneficiaries would constantly be filing removal petitions over minor disagreements. This would defeat the whole purpose of independent administration by converting it back into court-supervised administration through the back door.
The statute must be narrow enough to exclude ordinary mistakes. At the same time, it must be broad enough to protect beneficiaries from serious harm. Finding this balance requires understanding what duties an executor actually owes.
The Fiduciary Standard Applicable to Executors
An executor is a fiduciary. This legal term describes someone who holds property or authority for the benefit of another person. The executor holds legal title to estate assets but must use those assets for the beneficiaries’ benefit rather than personal gain.
Texas law imposes heightened obligations on fiduciaries. These duties exceed what people owe each other in ordinary business dealings. A fiduciary must act with utmost good faith, honesty, and loyalty toward the beneficiaries. Courts describe this as one of the highest standards of conduct known to law.
What does this mean practically? An executor must exercise reasonable care and skill in managing estate property. The executor cannot use the position for personal advantage unless the beneficiaries give informed consent. Self-dealing is prohibited. The executor must keep complete and accurate records. Full disclosure of all material facts is required. When conflicts arise between the executor’s personal interests and the beneficiaries’ interests, the beneficiaries’ interests come first.
These fiduciary duties exist independently of anything the will says. They arise from the nature of the relationship itself. Public policy demands strict enforcement of fiduciary obligations because beneficiaries are vulnerable. They rely on the executor’s integrity. The law protects this reliance by imposing severe consequences when a fiduciary betrays that trust.
The executor’s duties as a fiduciary help define what constitutes “gross misconduct” or “gross mismanagement” under Section 149C. The Geeslin court recognized this connection. Conduct that might be acceptable in an ordinary business relationship can become gross misconduct when a fiduciary relationship exists.
What Constitutes Gross Misconduct or Gross Mismanagement?
The appeals court in Geeslin acknowledged that the terms “gross misconduct” and “gross mismanagement” are elastic. They must be interpreted in light of both the statutory language and the underlying fiduciary principles. The court declined to create a comprehensive definition that would apply to all cases. Instead, it articulated a minimum standard.
According to the Geeslin court, gross misconduct or gross mismanagement includes at least three categories of conduct. First, any willful omission to perform a legal duty qualifies. The executor who deliberately fails to do something the law requires has committed gross misconduct. The failure must be intentional rather than inadvertent.
Second, any intentional commission of a wrongful act falls within these statutory terms. If the executor knowingly does something improper, this constitutes gross misconduct regardless of the ultimate harm. The intentional nature of the wrongful act is what matters.
Third, any breach of fiduciary duty that results in actual harm to a beneficiary’s interest qualifies as gross misconduct or gross mismanagement. This third category differs from the first two. It doesn’t require proof that the executor acted willfully or intentionally. Rather, it focuses on whether the executor breached a fiduciary duty and whether that breach caused real damage to the beneficiaries.
This three-part framework reflects the balance the court sought to strike. Simple negligence won’t support removal. The executor who makes an honest mistake using reasonable judgment shouldn’t lose the position. However, deliberate misconduct or breaches of fiduciary duty that harm beneficiaries will justify removal even in an independent administration.
How Courts Review Removal Decisions
The Geeslin court explained that appellate courts apply an abuse of discretion standard when reviewing a probate court’s decision to remove an executor. This standard gives substantial deference to the trial court’s judgment. An appellate court may conclude the probate court abused its discretion only in limited circumstances.
Abuse of discretion occurs when the trial court’s order was based on a legally irrelevant factor. For example, if the court removed an executor because the judge didn’t like the executor personally, that would be an abuse of discretion. Personal animosity has no place in deciding whether removal is warranted.
Similarly, abuse of discretion exists when the court fails to consider a legally relevant factor. If important evidence about the executor’s conduct was ignored or overlooked, the decision might be reversed. The trial court must weigh all legally relevant considerations.
Finally, an order is an abuse of discretion if it is entirely unreasonable in light of all legally relevant factors. Even if the court considered the right factors, the ultimate decision could still be unreasonable based on the evidence presented.
The appellate court identified several factors relevant to removal decisions. These include the high ethical standards implicit in the executor’s fiduciary status, the degree of harm beneficiaries suffered from the executor’s conduct, and public policy favoring independent administration. Other relevant factors include whether a bond might adequately protect beneficiaries, the complexity of the estate, whether the executor acted on professional advice, and the distinction between willful conduct and inadvertent mistakes.
The Tax Deficiency Problem
The heart of the Geeslin case involved how the executor handled a substantial estate tax deficiency. When the executor filed the federal estate tax return in December 1984, his accountants miscalculated the marital deduction. This resulted in an underpayment of $285,432 in federal estate tax.
Geeslin learned about this deficiency as early as April 1985. At that point, the estate still had time to minimize the damage. The longer unpaid taxes remain outstanding, the more interest accrues. Additionally, penalties can be imposed for failure to pay.
In January 1986, Geeslin sold a parcel of real property belonging to the estate. This sale generated cash proceeds of $473,997.59. Based on the court’s calculations, if Geeslin had paid the outstanding tax and interest at that time, the total would have been approximately $375,758.87. No penalty had yet been assessed.
Instead of paying the tax obligation, Geeslin made other choices. He distributed $50,000 to himself as executor’s commissions. He paid $316,967.57 to beneficiaries as distributions from the estate. He used the remaining funds to pay other estate obligations. The amount distributed to beneficiaries roughly equaled the combined tax and interest due at that time.
The situation continued to deteriorate. In May 1987, Geeslin received a final notice from the IRS demanding payment of the additional estate tax and accrued interest. The notice stated that a reply was required within 10 days to avoid enforcement of the estate tax lien and additional penalties. Geeslin failed to respond within the deadline. He didn’t notify the beneficiaries or their attorneys about the final notice.
The following month, Geeslin requested an extension of time to pay the estate tax obligations. Because he filed this request after the 10-day deadline specified in the final notice, the IRS refused the extension. A penalty of $28,476.22 was then assessed against the estate.
Finally, in February 1988, when the estate sold another property and received $750,000 in cash, Geeslin paid the outstanding tax obligations. By that point, the estate owed the original $285,432 in additional tax plus $131,409.07 in interest and a $28,476.22 penalty. Similar problems arose with state inheritance tax obligations, resulting in an additional penalty of $5,691.40 and more interest charges.
Was the Tax Mishandling Gross Misconduct?
The trial court found that multiple aspects of Geeslin’s handling of the tax deficiency constituted gross misconduct or gross mismanagement. The court identified five specific failures. Geeslin failed from the beginning to properly assess the estate’s income, taxes, and obligations. He failed to conserve and set aside funds or sell property when he learned about the additional tax liability. He paid beneficiaries from estate funds without first setting aside money for the tax obligations. He failed to stop distributing funds to beneficiaries and paying himself commissions after becoming aware of the tax deficiencies. Finally, he failed to make a timely request for an extension of time to pay the federal estate tax.
Geeslin’s defense rested on two arguments. First, he pointed out that reputable accountants had prepared the original tax return. The initial miscalculation wasn’t his fault. Second, he claimed the estate never had sufficient cash to pay the tax obligations until February 1988 when the final property sale occurred.
The appeals court found these arguments unpersuasive as to his conduct after learning of the deficiency. The court agreed that the initial miscalculation by the accountants might not be attributable to Geeslin’s conduct. However, once he knew about the additional tax liability in April 1985, his subsequent actions became his responsibility.
The evidence showed that in January 1986, when Geeslin had nearly $474,000 in cash from a property sale, he could have paid the tax and interest obligation. Instead, he chose to distribute that money for other purposes. The court found this decision unreasonable. Geeslin could have avoided the $28,476.22 penalty entirely by filing a timely extension request. He could have paid part of the tax obligation to reduce the steadily accumulating interest charges. He did neither.
This conduct fit within the court’s definition of gross misconduct. Geeslin willfully failed to perform his legal duty to pay estate tax obligations when he had the means to do so. He breached his fiduciary duty to protect the estate from unnecessary losses. This breach resulted in actual harm to the beneficiaries’ interests in the amount of the penalty and excess interest charges.
The court noted that the evidence would support a finding that Geeslin’s conduct after April 1985 amounted to gross misconduct and gross mismanagement. While not privy to the trial court’s exact reasoning due to the absence of detailed findings, the appeals court could identify a rational basis for the trial court’s decision. The trial court had acted within its discretion.
The Commingling of Estate and Pension Plan Funds
The second major issue involved Geeslin’s handling of funds from two different sources. During his lifetime, Thomas McElhenney had established a pension plan in connection with his medical practice. Geeslin served as administrator of this pension plan. The primary beneficiary was Sarah Ann McElhenney, the widow.
In early 1984, Geeslin terminated the pension plan. The plan held assets including cash, securities, and a lot encumbered by a mortgage. Importantly, the pension plan did not have its own checking account.
Over the course of his service as executor, Geeslin paid $130,000 in monthly mortgage payments on the pension plan’s lot. He made these payments from estate funds. He characterized them as a “widow’s draw” because Sarah Ann was the pension plan’s primary beneficiary. However, Geeslin’s accountant testified that the estate’s advance-draw ledger didn’t reflect these $130,000 in payments made for Sarah Ann’s benefit.
When Geeslin terminated the pension plan in 1984, nine participants were entitled to benefits. In 1988, Geeslin transferred $50,000 that had been held for the pension plan by a securities brokerage firm into the estate’s checking account. He then paid two pension plan participants in full from these funds. The remaining seven participants were still owed approximately $70,000 in benefits. Geeslin eventually paid them from proceeds derived from selling estate property rather than from pension plan assets.
The trial court found that Geeslin had commingled the funds of the estate and the pension plan. He had used estate funds to pay pension plan liabilities. He had also used pension plan funds to pay estate obligations. Most significantly, he had used estate funds to make terminating distributions to pension plan participants.
Geeslin’s own testimony undermined his position. He admitted that his attorneys and accountant had advised him that commingling these funds might be prohibited. He acknowledged that he “obviously went counter to that advice.” Federal law under 26 U.S.C. § 4975 actually prohibited the lending of money or other extensions of credit between a pension plan and someone who served as a fiduciary with respect to other funds. Geeslin also testified that he was unable to pay pension plan participants when required because he had depleted pension plan assets by using them to pay estate obligations.
Why Did the Commingling Support Removal?
The commingling of estate and pension plan funds presented a clear breach of fiduciary duty. An executor must keep estate assets separate from other funds. This basic rule protects beneficiaries by ensuring that estate property can be identified and accounted for. When an executor mixes estate assets with other money, it becomes difficult or impossible to determine what belongs to the estate.
The situation was even worse because Geeslin served as fiduciary for both the estate and the pension plan. He owed separate duties to the estate beneficiaries and to the pension plan participants. By commingling the funds, he created conflicts between these two sets of fiduciary obligations. When he used estate money to pay pension plan expenses, he benefited the pension plan participants at the estate beneficiaries’ expense. When he used pension plan money to pay estate debts, he harmed the pension plan participants.
Geeslin’s conduct also violated federal law. The prohibition on lending between a pension plan and a fiduciary with respect to other funds exists to prevent exactly this type of self-dealing. Geeslin occupied a unique position of control over both funds. His decision to commingle them served his administrative convenience rather than the interests of either the estate beneficiaries or the pension plan participants.
The harm to beneficiaries was concrete and measurable. Estate funds that should have been preserved for the benefit of Thomas’s children were instead used to pay pension plan obligations. Those obligations primarily benefited Sarah Ann, the widow. The children from the first marriage saw their inheritance reduced to cover expenses that should have been paid from pension plan assets.
The appeals court found this conduct supported the trial court’s removal decision. The commingling constituted gross misconduct under any reasonable interpretation of that term. Geeslin had intentionally acted contrary to professional advice. He had breached fundamental fiduciary duties. The breach resulted in actual financial harm to the estate beneficiaries.
The Court’s Decision on Commission Reduction
Beyond removing Geeslin from his position, the trial court also reduced his compensation. Texas law allows executors to receive reasonable compensation for their services. The Texas Estates Code provides that compensation may not exceed five percent of amounts received in cash and five percent of amounts paid out in cash. However, the court can reduce this amount if the executor’s performance doesn’t justify full compensation.
The trial court limited Geeslin’s commissions to 2.5 percent of the gross estate, or $137,010.77. Since Geeslin had already been paid $270,000 in commissions, this required him to refund $132,989.23. Geeslin challenged this reduction on appeal.
The appeals court upheld the commission reduction. The court found that the trial court had acted within its authority under Section 241(a)(2) of the Texas Probate Code. The reduced commissions could reasonably be viewed as commensurate with the value of Geeslin’s services when balanced against the harm done to the beneficiaries’ interests.
This aspect of the decision reinforces an important principle. An executor doesn’t automatically receive the maximum allowed commission. The compensation must be earned through faithful performance of duties. When an executor’s misconduct causes substantial losses to the estate, those losses can justify reducing or eliminating commissions. The executor bears the financial consequences of breaching fiduciary duties.
The Takeaway
This case shows that serving as executor of a Texas estate carries serious responsibilities and substantial risks. Even when operating under independent administration with minimal court oversight, executors must maintain the highest standards of conduct. The case shows that mistakes in professional judgment may be forgivable, but deliberate actions that harm beneficiaries’ interests will result in severe consequences. Fiduciary duties require putting beneficiaries’ interests ahead of convenience or personal benefit. When professional advisors warn against particular actions, ignoring that advice can support findings of gross misconduct. Financial losses resulting from an executor’s decisions will be scrutinized carefully. Courts will intervene even in independent administrations when executors’ conduct crosses the line into gross mismanagement. The potential consequences include removal from the position and forfeiture of substantial compensation earned over years of service.
Do you need help with a probate matter in Austin or the surrounding area? We are Austin probate attorneys. We help clients navigate the probate process. Call today for a free confidential consultation, 512-273-7444.
Our Austin Probate Attorneys provide a full range of probate services to our clients, including helping with probate administrations. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process. We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
Disclaimer
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
