Simmons Bank stands accused of mishandling trusts a Pine Bluff tree farmer established for his daughter and granddaughter.
W.J. Thomasson, who died in 2018, funded the trusts using some of his approximately $4.25 million in assets. Thomasson had amassed about 1,000 acres of land in five southeast Arkansas counties.
The daughter, Paula Thomasson of Warrenton, Virginia, said in court documents that Simmons caused emotional and financial damage to her and her daughter. She alleges the bank denied requests for reimbursement for expenses like car repairs and at other times ignored requests for money altogether.
W.J. Thomasson’s will called for trusts to be set up for Paula Thomasson, 56, and her daughter. Simmons Bank became co-trustee of each trust, with Paula Thomasson serving as a beneficiary and co-trustee of her own trust and co-trustee for her daughter.
In 2022, Simmons, which has denied wrongdoing, wanted to be removed as the trustee and asked Thomasson to sign a waiver releasing it of any liability and indemnification before the trust funds would be released to another trustee.
Thomasson refused and alleged that the bank had failed to respond to a court order in her divorce case. The order had sought asset information about the trusts and her father’s estate, Paula Thomasson said.
As a result of Simmons’ inaction, Thomasson said, she was found in contempt and ordered to pay her ex-husband’s attorneys’ fees.
Simmons went to Pulaski County Circuit Court in December 2022 and asked to be removed as trustee for the trusts. Thomasson responded with a charge of breach of trust and asked that Simmons be removed as co-trustee. She also accused Simmons of running up legal bills and using her trust funds to pay for attorneys.
“There have been dark times since losing my dad six years ago and dealing with Simmons — psychological, emotional and financial damage inflicted for no reason,” Thomasson said in an email to Arkansas Business.
“Imagine the gut wrenching reality of being faced with cutting trees in a down global market to pay Simmons’ legal bills to the Mitchell [Williams Selig Gates and Woodyard] law firm to sue me so [Simmons] could quit the job my father hired them to do,” she said.
Thomasson has asked Pulaski County Circuit Judge Casey Tucker to require Simmons to refund the trust the amount it paid attorneys.
Simmons declined to comment on the case because of the pending litigation.
But in court filings, it denied Thomasson’s allegations of wrongdoing and said her case should be dismissed. It said the trust documents give it the authority to use the trust money to pay expenses related to the trust, including hiring attorneys.
Paying for the attorneys was proper “given the circumstances under which they were incurred,” Simmons said in its filing.
Tucker didn’t rule on Thomasson’s request for reimbursement of the attorneys’ fees at a May hearing. But Tucker said in an order from May that Simmons is barred from using the funds from the trusts to pay for any costs or fees.
Thomasson also accused Simmons of dragging its feet by changing attorneys. On Sept. 20, Simmons said in a filing that it is represented by Charles Coleman and Jacob Fair of Wright Lindsey Jennings LLP of Little Rock, who replaced attorneys at the Mitchell Williams law firm.
The case in some ways highlights the conflicts that arise when a corporate trustee and an individual trustee who is also the beneficiary are co-trustees of the same trust, said Gerry W. Beyer, a professor at Texas Tech University School of Law. “I know that many banks won’t even accept that job, or if they accept it, they charge a higher fee, because there’s just too many problems,” he said.
Beyer said the beneficiary trustee has a great incentive to want more money from the trust, and the trustee’s duty is to follow what the creator of the trust wanted.
The corporate trustee has to be firm and deny requests that aren’t what the creator of the trust wanted, he said.
Creating the Trusts
During his career, W.J. Thomasson worked at International Paper Co. as a purchasing supervisor. But he also was interested in tree farming. Over the years, he bought timberland, and was a success. In 2012, the Arkansas Forestry Association named him the outstanding tree farmer of the year.
He told the Northwest Arkansas Democrat-Gazette that he had enjoyed forestry as a hobby. “The Lord has been so good to me and allowed me to harvest some trees that I planted years ago,” he told the newspaper in 2012. “I have truly been blessed.”
He died at the age of 91.
In his will, he wanted trusts created for his daughter and his granddaughter. Paula Thomasson’s trust was created to provide her with installments and as much of the principal of the trust as the trustee determines is necessary for her health “and support in her accustomed manner of living.”
Beyer said it’s common in such documents to use that type of vague language about what the trust money can be spent on. “That’s why you want a neutral person making the decision, not making the decision for yourself,” he said. “I may think around-the-world cruises are what I need for my normal lifestyle, or I need maids.”
The trust is supposed to support the lifestyle the beneficiary was living before she became a beneficiary, “not a higher lifestyle, not a lower one, unless the trust says something different,” Beyer said.
But Thomasson said that Simmons denied requests for reimbursements for things like real estate taxes, living expenses and appraisals, according to court documents.
She also said that Simmons didn’t make the necessary disbursements for her daughter’s expenses for college, which resulted in Thomasson incurring debt. Thomasson is represented by Judson Kidd of Dodds Kidd Ryan & Rowan of Little Rock.
Thomasson also said in the court filing that Simmons’ “willful refusal to issue necessary disbursements substantially increased” in late 2022 when the bank said it wanted to resign as co-trustee.
She alleged that Simmons “abandoned its fiduciary duties in, what appears to be, an attempt to coerce [Thomasson] into signing a blanket release indemnifying [Simmons] from any and all liability.”
A final two-day hearing is set to start Nov. 19.
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