Estate Beneficiaries: Don’t be too quick to sign a Release
Estate Trustees are entitled to approval of their administration of the Estate by way of a Passing of Accounts in Court pursuant to Rules 74.17 and 74.18 of the Rules of Civil Procedure or to receipt of signed Releases from all beneficiaries prior to making final distribution and winding up their administration of the Estate. On an interim distribution, however, they are entitled to insist on nothing more than a signed acknowledgment of receipt.
Asking for the Release is not in itself improper, but refusing to make the interim distribution unless it is signed is not appropriate. Mr. Justice Sheard put it succinctly in Brighter v. Brighter Estate 1998 CarswellOnt 3113 when he held:
The executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor’s performance of duties as trustee, or the executor’s compensation or fee. It is quite proper for an executor (or Trustee, to use the current expression) to accompany payment with a release which the beneficiary is requested to execute. But it is quite another matter for the trustee to require execution of the release before making payment; that is manifestly improper.
Despite this clear statement of the law, it remains common practice of many Trust companies that act as Estate Trustees and of many lawyers acting for Trustees, to insist upon the signing of a Release by beneficiaries prior to making an interim distribution of Estate assets. When my clients are met with such a demand, I have found that delivery to the Trustee of a copy of Justice Sheard’s ruling in the Brighter case is often enough to persuade the Trustee to withdraw the demand for a signed Release.