The ‘duty to account’ is one of the core obligations owed by the personal representative of an estate to its beneficiaries. It applies where the personal representative is an executor and trustee (appointed in a will) and where the personal representative is an administrator (a representative granted authority by a court in the case of intestacy or partial intestacy).

In light of this duty, and in order to avoid personal liability for misadministration, it is common practice for personal representatives to request that beneficiaries sign a release and indemnity prior to making a distribution from the estate. However, whether or not an executor can demand a release as a precondition to the beneficiary receiving payment is another matter entirely.

The first reported case addressing an executor or trustee’s entitlement to demand a release is Chadwick v. Heatley (1845), 2 Coll. 137, 63 E.R. 671 (Eng. Ch.). There, the trustee sought to distribute trust funds to surviving beneficiaries. As a condition for payment, the trustee required the beneficiary to execute a general release. When the beneficiary refused to sign and went on to sue to trustee, the court came to the conclusion that while the trustee was within his rights to request a release, her did not have the right to insist on one being signed.

More recently in Bronson v. Hewitt, 2010 BCSC 169, the request put forward by the trustee included a release of future claims in addition to a provision that the beneficiaries would indemnify and hold the executor harmless from any claims arising since his appointment. Although the authorities make it clear that a trustee is entitled to request a release of future claims, in this case the court had problems with the breadth of the indemnity sought. It didn’t help that the trustee only paid out those beneficiaries who signed the release.

Other courts have similarly criticized executors who ‘hold beneficiaries or assets hostage’ by requiring releases prior to payment (see Brighter v. Brighter Estate, [1998] O.J. No. 3144 (Ont. Gen. Div.) and Rooney Estate v. Stewart Estate, [2007] O.J. No. 3944 (Ont. S.C.J.) - both affirmed in BC by the court in Bronson v. Hewitt).

All of this is to say, while a prudent personal representative may simply be trying to protect themselves from personal liability by requesting a release, they must be careful not to demand one. In the event a beneficiary refuses to sign, the proper next step is to apply to the court for instructions or to commence an application to pass their accounts.

This article is intended for information purposes only and should not be taken as the provision of legal advice. Richard A. Cleveland is lawyer whose practice focuses on family, wills and estates, and employment law. He is a partner with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or rick@clevelanddoan.com.