Her Brother and Sister Ran Their Parents' Trust Together — Then the Court Found They Broke Their Duties and Removed Them Both as Trustees

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Family money has a way of turning regular tension into something sharper. One minute you’re talking about Dad’s old tools in the garage, and the next you’re arguing about “intent,” “fairness,” and who’s “doing all the work.” In an Iowa trust fight that worked its way up to the Court of Appeals, three siblings ended up in exactly that kind of mess—only this time, a judge had the final say.

The decision, In re Meyer Family Revocable Trust, lays out what happened after parents Paul and Cathy Meyers died and their children started disagreeing over a business, a promissory note, and trustee duties. The full opinion is available in the source material, and it’s a cautionary tale for anyone who thinks “keeping it in the family” automatically keeps things clean.

At the center were two siblings—Carl Gorman Meyers and Teresa Renee Woodley—who ended up running the parents’ trust together. The court ultimately found they broke core fiduciary duties and removed them both as trustees, appointing a bank to take over. That’s not a small rebuke. It’s the court saying, plainly, “You can’t be trusted with this responsibility anymore.”

The trust plan sounded simple until life got involved

Paul and Cathy executed wills and the trust agreement on the same day in 2012. Back then, Paul and his son Carl each owned 50% of a construction company, Meyers & James Construction Company, Inc. Their estate plan routed what they owned into the trust at death, and the trust included a key line: after both parents died, “all right, title, and interest” in the company would go to Carl, if he was living.

Everything else in the trust was set to be split equally among the three children: Carl, Teresa, and their sister Lora Hickey. That kind of structure is common: one child gets the family business, the rest of the estate gets divided evenly. It can work—if the business interest is still sitting there to give away, and if everybody handles the rest with clean hands.

The deal that changed everything: stock sold, note created

In 2017, Paul sold his shares of the company to Carl in a stock purchase agreement for $374,449.90. Carl paid $50,616.56 right away and signed a promissory note for the remaining $323,833.34. To secure the note, Carl also signed a security agreement giving Paul a security interest in Carl’s interest in the company.

Then Paul died about three years later, and Cathy died a few months after that. Their assets flowed into the trust. All three children became co-trustees initially, but Lora later resigned, leaving Carl and Teresa as co-trustees.

That’s where the tension stopped being theoretical. Because once the trust owned the note Paul held, someone had to decide whether Carl still needed to pay the trust what he owed. If the trust collected the balance, that money would be part of what got divided equally among all three siblings. If the trust didn’t collect, Carl effectively kept that value for himself.

Co-trustees tried to waive a debt owed by one of them

A dispute developed about Carl’s obligation to pay the remaining balance on the note to the trust. Carl and Teresa took the position that he didn’t owe it, while Lora argued the opposite. The trust’s attorney asked the court to take jurisdiction, and shortly after that, Carl and Teresa executed a document declaring the trust “shall not assert that any amounts are owed to the Trust by [Carl]” for his previous purchase of the company.

If you’ve ever watched families fight, you know how this kind of move gets justified. People tell themselves they’re honoring Dad’s wishes, or “keeping things simple,” or avoiding conflict. But trustees don’t get to freestyle. Their job is to follow the trust and act in the beneficiaries’ interests, not pick favorites—or protect one trustee from a legitimate obligation.

Lora filed a petition alleging breach of trust and unjust enrichment, and she sought attorney’s fees. After an earlier round on appeal and a remand, the dispute returned to the district court, where Lora filed an amended petition and pushed for partial summary judgment. This time, she also raised an argument that the company bequest to Carl had adeemed.

The court: the business gift adeemed, and the note wasn’t a substitute

Here’s the heart of the legal issue: the trust said Carl would get “all right, title, and interest” in the company. But Paul had already sold his shares before he died. The appellate court agreed with the district court that, at Paul’s death, he no longer owned the company interest itself—so there was nothing like that for the trust to distribute to Carl.

Carl and Teresa argued, essentially, that the promissory note was another form of the company interest, and that Carl should receive it under the trust provision. The court rejected that. The note was proceeds from the sale of the interest, not an ownership interest in the company.

The opinion walks through Iowa cases where courts refused to swap in sale proceeds when a specific gift no longer exists at death. The basic logic is blunt: if you specifically leave someone an asset, then you sell that asset while you’re competent and alive, that specific gift is gone unless the estate plan says otherwise. The court found that’s what happened here. The gift of the company interest to Carl adeemed, and the note did not automatically slide into its place.

But the security interests were treated differently

One wrinkle mattered. The court drew a distinction between the note itself and the security interests that secured it. While the note was not “a right, title, or interest” in the company, the security interests were tied directly to the company interest and fell within the trust language giving Carl “all right, title, and interest” in the company.

So the appellate court modified the district court ruling in part. Carl still owed the outstanding balance on the note, but the trust’s security interests in the company were released to him. Put in plain terms: Carl still had to pay, but the debt was no longer secured by a claim against his company interest.

That’s a technical detail, but it’s the kind of technical detail that costs real money if you ignore it. Trusts and business deals don’t stay in their lanes. They overlap, and when they do, families either get good counsel and follow the paper, or they learn the hard way.

Why the court removed both trustees

After deciding the note still belonged to the trust as an asset to be collected, the court turned to what Carl and Teresa did as co-trustees. Trustees have a duty to administer the trust solely in the beneficiaries’ interests, to act with due regard to each beneficiary, to avoid self-dealing, and to take reasonable steps to enforce claims of the trust.

The court concluded Carl and Teresa breached those duties by trying to avoid enforcing the note—effectively attempting to wipe out Carl’s obligation to pay money that would have been distributed equally among the three siblings. They argued they acted in good faith. The court wasn’t persuaded, and good faith doesn’t give trustees permission to ignore duties that exist to protect everyone involved.

The district court removed both Carl and Teresa as co-trustees and appointed a bank as trustee, and the appellate court’s decision reflects that outcome. Getting removed like that is what happens when the court believes the role has been compromised. Whether it’s greed, denial, misplaced loyalty, or just stubbornness, the effect is the same: beneficiaries lose confidence, and courts don’t like trustee games.

Attorney’s fees added to the damage

Along with removal, the district court ordered attorney’s fees. After Lora submitted an attorney fee affidavit, the court ordered Carl and Teresa to each pay Lora $19,133.43. They challenged the fees on appeal as well, while Lora asked for appellate attorney’s fees.

Whatever someone thinks is “fair,” legal fights have a way of turning an inheritance into a bonfire. You don’t just burn money; you burn time, family relationships, and peace of mind. And when trustees take actions that a court views as a breach of duty, they risk paying personally instead of having costs absorbed by the trust.

There’s a lesson here that doesn’t require a law degree. If you accept the job of trustee, you’re not just holding keys—you’re holding a position of trust in the old-fashioned sense. You don’t get to protect yourself or your favorite sibling. You do the right thing in the open, you document it, and if you can’t do that, you step aside before a judge makes the decision for you.