An Executors Right to a Release upon finalisation of Estate Administration
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You were chosen by the will maker to be the Executor of their Will. You have collected all the assets, paid all the liabilities and the estate is ready to distribute. You have properly carried out your duties and the job is nearly done. Note however that once the estate is fully distributed, the reality is that you lose access to the estate fund with which to defend your actions as Executor should a claim be made by an unhappy beneficiary.
In more complex or valuable estates, upon completion of the estate administration and before a final distribution is made, it is common for the Executor to request that the residuary beneficiaries sign a Release and Discharge. This is so that the Executor has an assurance that the beneficiaries accept that the Executor has properly discharged his/her Executor’s duties.
However, an Executor cannot make a final distribution conditional upon the beneficiaries providing a Release unless there are exceptional circumstances.
The reasoning being that a beneficiary should not be prevented from making a claim against an Executor for any breaches of trust.
Unhelpfully, there is no clear authority on what constitutes exceptional circumstances. One example might be where an Executor has committed a breach of trust, e.g. handing over money or property although the beneficiary may not yet be absolutely entitled to it. Another example might be the threat of litigation.
If it is the case that there is a risk of a beneficiary disputing the management of the estate administration and a Release and Discharge cannot be obtained, it may be prudent for the Executor to file, verify and possibly pass the accounts of the Estate in the Supreme Court, which is somewhat similar to an audit. If the Court is satisfied with the accounts, then a certificate is issued which indicates the accounts have been settled and are correct.
The process of passing the accounts is time consuming and costly. Normally most residuary beneficiaries will sign a release and discharge upon request, but if they do not, then an Executor can avail themselves of the process of the passing of the estate accounts to ensure their administration of the estate is approved by the Court.
Note however, that if a beneficiary alleges that there has been a breach of trust resulting in a loss to the Estate, then these matters will not be dealt with in the process for passing of accounts, rather the beneficiary would be required to commence proceedings against the Executors.
If you have any queries about estate administration either as an executor or beneficiary, please contact McColm Matsinger Lawyers and one of our estate administration team will be happy to assist you.
McColm Matsinger Lawyers
The information in this document represents general information and should not be relied on for your specific circumstances. If you require legal advice and assistance on the matters contained or associated in this document you should contact MMLaw. Please contact Christine Matsinger.
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The content published in this Blog is in the form of academic papers and the opinions expressed herein are generalised. The information provided is for educational purposes, not specific legal advice.
The application of any principles referred to can alter from case to case and accordingly you should seek independent legal advice in respect of your individual circumstances.