Please Release Me, Let Me Go
Engelbert Humperkinck reached #1 with his version of “Release Me” in 1967. Estate Trustees have been singing the tune ever since.
In their Hull on Estates podcast of December 17, 2013, Moira Visoiu and Noah Weisberg discussed whether an Estate Trustee is entitled to insist upon a release prior to making a distribution.
In the decision of Sheard Estate, 2013 ONSC 7729 (CanLII), released December 12, 2013, Mesbur J. of the Ontario Superior Court of Justice considered the binding effect of a release on beneficiaries where the release was not a condition of the distribution.
There, the deceased died on December 28, 2007. An interim distribution of the estate was made in September 2008. The beneficiaries were asked to sign a receipt, and they did. A second interim distribution was made in September 2009. At that time, along with the cheque, the beneficiaries were provided with a release that they were asked to sign. The release stipulated that the beneficiaries were provided with a sufficient accounting of the administration of the estate from December 28, 2007 to June 2009, provided the estate trustees with a full release, and dispensed with a passing of accounts. The beneficiaries signed the release.
A further distribution was made in December 2012. Again, the beneficiaries were asked to sign a release. They did not.
The estate trustees then moved to pass their accounts for the period from July 1, 2009 to June 30, 2012. The beneficiaries objected, and brought a motion to compel an accounting not just from June 1, 2009, but from the date of death.
In response to the motion, the estate trustees argued that the claim to set aside the release was statute-barred. Madam Justice Mesbur agreed. The release was signed in 2009, and the motion to set aside the release was not launched until 2013: well outside the 2 year limitation period. Madam Justice Mesbur rejected the argument that the motion to set aside the release was not a "proceeding" to which the Limitations Act applied.
Madam Justice Mesbur also held, in the alternative, that there was no basis to set aside the releases. Firstly, as the releases were said to be under seal, there was no need for separate consideration. Secondly, there was no evidence that the beneficiaries did not intend to be legally bound by the releases. Thirdly, the fact that the estate trustees did not suggest independent legal advice to the beneficiaries did not take away from their enforceability (although Mesber J. said that it would have been "better" if this was suggested).
Mesber J. noted that in requesting the releases, the estate trustees did not hold the bequest to ransom. There was no question of duress on the beneficiaries. Mesber J. distinguished Rooney Estate v. Stewart Estate, were releases were set aside where the estate trustee demanded a release before delivering accounts, and suggested that there would be no payment unless the release was signed.
A lesson to be taken from this, as estate trustee, is to not tie a release to a distribution. As a beneficiary, consider the effect of signing a release, and, where there is a question, obtain legal advice.
Thank you for reading.