If You Have Valid Concerns, Don’t Sign a Beneficiary Release

July 14, 2021 Suzana Popovic-Montag Executors and Trustees, Passing of Accounts Tags: , 0 Comments

If a loved one has died and you are named in the Last Will and Testament as a beneficiary, the estate trustee will probably ask you to sign a release before any assets are distributed. This legal document confirms that you approve how the estate has been administered to date.

As a residual beneficiary, you are entitled to receive a detailed report of all income, expenses, and distributions from the estate, plus be given the chance to review and approve any compensation requested by the estate trustee. These reports should be as complete and informative as possible, so that when you sign the release you feel you are doing so in an informed fashion.

Along with the request for the release to be signed, there should be a statement that makes it clear that you have the option not to sign the release. At this stage, it is a good idea to seek independent legal advice. You may be unsure of the estate accounting, or the level of compensation claimed by the estate trustee, or there could be other issues related to how the estate was handled.

As the court stated in Rooney Estate v. Stewart Estate, “It is not an answer to say that the beneficiary approved of the accounts and gave a release. One of the obligations of the solicitor acting for the trustee is to ensure that all beneficiaries have competent, independent advice in reviewing the accounts. There is no suggestion by the solicitor that he advised the [beneficiaries] to obtain independent legal advice when reviewing the trustee’s accounts which he had prepared.”

It can be expected that the estate trustee will have received a Tax Clearance Certificate from the Canada Revenue Agency, confirming that all monies owing by the deceased and the estate have been paid. If the estate is distributed before this Certificate is received, the estate trustee could be held liable for any unpaid tax debts.

While it is easy to understand why beneficiary releases are commonly sought by estate trustees, Ontario courts have held that it is improper for trustees to withhold payment or delivery of an inheritance if a beneficiary has refused to sign. At this point, a passing of accounts may be the next step.

From the estate trustee’s perspective, a passing the accounts is the easiest way to deal with uncooperative or unreasonable beneficiaries. Approval of your accounts by the court also removes the need to obtain the consent of the beneficiaries.

If the estate trustee has not sought to pass his or her accounts, the beneficiaries may seek a court order that compels that to happen. During this court approval process, beneficiaries can raise any concerns they have with how the estate was handled. The estate trustee will also be able to explain to the court what they did for the estate, why certain expenses were incurred/payments made, and provide justification for any claim for compensation.

As part of this process, the beneficiaries can request and review the estate trustee’s documentation, such as bank statements and invoices received. Having said that, you should have a good reason for contesting the handling of the estate, as an unnecessary or ill-founded challenge may end up costing you greatly. For example, if you are challenging the honesty and integrity of the estate trustee but in the end the court finds they acted ethically and competently, you may have to pay not only your own legal expenses, but also the legal expenses incurred by the estate trustee in defending your allegations.

If you have any questions or concerns about a beneficiary release, it is wise to seek legal counsel before making the decision to sign it.

Thanks for reading – and have a great day!

Suzana Popovic-Montag

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