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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.

25 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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    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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    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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    2. residue are also about estate airlooms.... you get 0% of the estate but are granted residue rights..... the old familiy farm house where the bother still wants his fathers house....
      residue have dibs on the sale assets.... or let say wedding rings.... you cant just take them can you.... it belongs to the residue...unless it was let go as a gift.... now can the excutor just sell things no.....
      can the exscutor hid behind a living will... no.... its a will before death.... its not an accident death Will its will made by surrender...i cant do this any more...... i belive you get a copy of the will before death this way.... the deeds are set and cant be changed... a living will....your mother is 90 and the will must be distributed.... someone has taken control of a deed on root.... this where thieft happens the will is not distributed and the trustee sell off estaste residue without you knowing...like the house where they claim your mother wanted to sell and buy but she is no longer able... they do it suck out estate fees or flip and buy things the more they do the more returns they make...
      5%

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    3. Where do I get a Release Form to give to the beneficiaries of the estate I am executing? Also, is there some generic form for the accounting of the estate.

      Thank you.

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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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    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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    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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  10. Hi, Lynn, great blog, I've heard that due to recent changes in the lawin the province of Ontario, it is no longer necessary for beneficiaries to sign a release receive their bequeath. could you please confirm if this is true.

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  11. Does the "Release of Estate Trustee" require notarization by a notary public?

    Thank you.

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    1. As a general rule, no. They are different in each province, but usually they do require a witness who would then sign an affidavit of execution. Usually those do not require a notary unless the beneficiary who is signing the release lives in a different province than the estate.

      Lynne

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  12. Hi Lynn, I am one of four children beneficiary of our mothers estate. My brother and sister are executors. I have been forwarded a final draft which has my other 3 siblings named on a 4 way equal split of the estate however my share of the split has not named me and is left blank. I have been requested by the lawyers to sign a indemnity stating as a beneficiary that I agree to the draft and for the funds to be distributed.

    I have previously requested that I be named on the draft, a new draft was drawn up including my name withe my siblings and the total amounts of the 4 way split, but when the indemnity request for me to sign was sent to me by the lawyers it contained the original draft which didn't include my name.

    I have decided not to sign and seek legal advice, any thoughts on my situation would be appreciated

    Thank you

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    1. You haven't said which document you received in draft, but from the context I'm assuming it was some form of Statement of Proposed Distribution.

      I wouldn't sign it either if it didn't state what I was supposed to be getting.

      Most likely, someone in the law office accidentally included the earlier draft of the document rather than the latest one, but it does need to be correct before you sign it.

      Lynne

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  13. do not sign anything if you are not satisfied . The POA for our step mom has never produced accounts of over ten years ; he became executor , we asked for accounts as POA he died how do we know he handled the affairs properly. How do we know the starting inventory is correct? He died and conveniently his executor does not want to probate his will. How stupid are we? Signing releases is condoning all this scull duggery. The estate of my step mom was really my fathers estate. She signed over 2 million into joint account using a POA. Now her POA does this. The POA act in Nova Scotia is deplorably wanting dig in your heels don't sign unless you just are willing to give up. that is what they are hoping for in this case as we will as we are fed up with litigation and corrupt POA. He was convicted of fraud and forgery many years ago. One way to stop a POA from doing this is ask for an accounting when tour lovrd one is still living. tell the POA what you suspect them of that will make them realize you are on to them. Be point blank matter of fact. Do the same with the estate thing Trust no one--- no one follow your gut instincts . We have been given instincts to protect ourselves.

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  14. Hi Lynne

    I am the Administrator of an estate, and the will states that 2 individuals are to receive $5,000 each. Do you advise that they sign any sort of Release before I pay them the money (they are not beneficiaries), or just send them a cheque. Many thanks, love your blog!

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    1. Hi Karen,
      They are beneficiaries if they are named in the will, but they are not residuary beneficiaries.

      If the will is a decent, well-written will and there is no question about the identity of the beneficiary or the amount of the bequest, and the debts and taxes of the estate have all been paid, there is likely no reason for you to just write a cheque.

      Whether or not you get any particular beneficiary to sign a release is always a decision made after looking at the risk of not having them sign one, and the benefit of having them sign one.

      I can tell you that in most cases, executors don't get releases for small bequests like $5,000. They feel that there is little risk because their entire exposure is $5,000. Others like to have releases anyway, especially if the beneficiary is someone who has been difficult to work with during the estate.

      Lynne

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    2. Thanks for your quick reply, Lynne. Your point is taken, regarding the status of the beneficiaries. Although the will is written well enough, given that I do not personally know these two individuals, I think I will have them sign a release, just like the residuary beneficiaries will need to do (don't want to risk my own $10k).

      On another note, I've been trying to find (google) samples of what goes into an executor's accounting (loved your blog dated Aug-30-2010) but do you know of any samples to share? I'm not quite sure about the format to present the info in (yes, I'm a total newbie). THX! :)

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