Saturday, September 4, 2010

Why do residuary beneficiaries sign a release?


When the executor of an estate has finished cashing in assets and paying bills, has filed the tax returns and is ready to pay the beneficiaries, he or she will send the residuary beneficiaries a set of financial statements. Along with the statements will be a Release. If the executor is doing things properly, no residuary beneficiaries get their money until all of them have signed and returned the Release to the executor.


So what is the legal effect of that Release? What is the beneficiary really doing by signing it?


The financial statements that come with the Release are intended to give a full, accurate picture of all of the financial transactions the executor has done on behalf of the estate. The beneficiary should be able to tell from the statements what happened with every asset of the estate (e.g. the deceased's home was sold for $x and the money was put into the executor's account). The statements should show what was spent on the funeral, legal fees, accounting fees and other expenses. The beneficiary is entitled to ask for more detail if he or she believes that to be necessary.


By signing the Release, the beneficiary is approving of the financial statements and all that they contain. Releases will often refer to a time period, usually beginning on the date of death and continuing up until the day the Release was sent to the beneficiary. In those cases, the beneficiary is approving of everything the executor did during that time period. Sometimes in more complicated estates there will be more than one set of financials, perhaps with the second set a year or so after the first, but in most estates there is only one.


By signing the Release, the beneficiary is saying that he or she is satisfied with everything the executor has done. He or she is agreeing in writing that everything is fine. The beneficiary can not later come back and find fault with the accounting, for example by saying that money is missing or that the house was sold for too little. The beneficiary is signing off on it and can't later change his or her mind.


This protects the executor from anyone coming back later and beginning a legal battle over something in the estate. Beneficiaries also benefit from it because the executor, who wants the Release to be signed, will usually provide a thorough accounting that answers all of the beneficiaries' questions.


A beneficiary does have the right to have the accounting looked at by an accountant or a lawyer before signing the Release, though most do not. Every case is different and the beneficiary should take his or her time to read the accounting thoroughly before signing the Release and returning it to the executor.

12 comments:

  1. Your site was very helpful reading about full financial estate accounts, signing a release etc. I live out west and have a sister living out west too, I have 2 brothers living back east in ontario. Have not had contact with both brothers for 20 plus years. My father loved all of us each in our own ways. He passed away last summer and I still haven't seen the will, however know that we are all listed as four equal beneficiaries. They both cleaned out my dads place and my sister and I received nothing, or a list of its contents, we know he had a safety deposit box, a savings, checking and RRIF accounts.
    I was told that they don't know my dads lawyer and they think she doesn't even retain her office anymore?
    They are asking me and my sister for bank account numbers so they can give us our share. It seams pretty sudden as its only been 90 days since death.
    Ive not given my bank #, signed a release, or seen any financial documents which I'm hoping to see. My question is how can I find out the truth about what my dad really had, and can they both just keep what ever they want? Can they produce financial documentation with things missing from it>? Who watches the executor? Thanks

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  2. Does an executor also have to sign a release form if they are also a bennificary

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    Replies
    1. No, they don't have to. The purpose of the release is to indemnify the executor, so if the executor feels there is no risk in not signing one himself, that's his choice.

      Lynne

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  3. my husband is executor of the will with his elder sister but has no access to the house key and garage is he allowed to the have the keys to the estate the day of his mothers death . the sister is renting the house to her daugher is that a problem


    thank you Doris

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    Replies
    1. Hi Doris,
      I answered your question in a new blog post: http://estatelawcanada.blogspot.ca/2013/04/one-co-executor-has-rented-out.html

      Cut and paste that into your browser :)

      Lynne

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  4. What do we do if the trustee has not updated us for the past 4 plus yrs...we have request updates but non given...now we are being told to sign release with very little info given...

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    1. I'd be hesitant to sign the release too. I would suggest that you make a detailed list of what you need to know. For example, don't just say "this isn't enough"; ask specific questions such as "where is the deposit from the sale of the house?". If you and the other beneficiaries want to do this together, you certainly can. Send the list - politely but firmly - to the trustee and say that you'll be glad to sign the release once you have a more clear picture of what's happened in the estate. If this doesn't work, you may have to hire a lawyer to send the request.

      Lynne

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  5. Is there a standard release form ? I have obtained one from my Estate lawyer and one of the beneficiaries will not sign - as the form states "Received" and her take is that she has not received the funds, so her lawyer has changed it to "to be received" and added in codicil items. I don't want to accept it with those changes, as it is not a clear release for me, as executor. Can you help?

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    Replies
    1. I answered your question on a new blog post - here is the link: http://estatelawcanada.blogspot.ca/2014/11/beneficiary-and-executor-at-stalemate.html

      Lynne

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  6. Thank you Lynne Butler!,
    I am one of four beneficiaries, in a fairly simple an hopefully straightforward settling of late mother's estate, only one property involved, but a sibling benficiary and the executor told me that taxes an other costs will taken out of my share of estate property sale. I don't think that's fair or equal, as the will states property to be left to myself and 3 siblings. I am seeking equal share after taxes an other expenses paid out from estate sale. To me it seems that executor an sibling beneficiary came to an agreement to make me shoulder all associated costs of taxes an other expenses, which is to me underhanded? and kinda shady dealing compelling me not to sign any release an maybe force a passing of accounts thru the court system?

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    Replies
    1. Have you actually had a chance to read the will? You said it leaves the estate to four of you equally, but what else does it say? Are you all residuary beneficiaries? Are you receiving a different kind of share, such as getting real estate while the others take cash? While it would be pretty unusual for one beneficiary to pay all of the taxes and costs, it's not impossible.

      If the will does not specifically say something to the effect that you are to cover the costs and taxes, then the estate falls back on the general rule, which is all of that should be paid out of the residue of the estate before anyone receives a share (this would result in equal shares to all).

      Keep in mind that there are other rules and laws that interact with the will and can affect who pays taxes.

      If the executor and one beneficiary came to an agreement that you are to carry all these costs, they are mistaken. They are not entitled to that.

      Lynne

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  7. My sister is the executor. On November 20th we were to meet and have the release signed. Then she decided to complicate our situation and place demands on when I could go, and that my husband was not able to come with me to look over the form. Since then I have contacted the estate lawyer and accountant and neither will provide any information on how I can see the accounting information before signing the release. The lawyer told me to contact the executor or accountant, the accountant told me to contact the executor or lawyer and my sister is telling me to contact the estate lawyer. My sister has had her OSAP paid off (20, 000) and other then my sister taking her 5% (which I am fine with and agree with), each grandchild (2 each) receives money for their RESP the will is being split between the two of us. What are my next steps?

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