What Happens If a Beneficiary Refuses to Sign a Release in New York City?

When the beneficiary of an estate or a trust refuses to sign a release, the trustee or executor must prepare to file a judicial settlement of his account in order to be discharged from liability.

A release is a legal document given by the executor or trustee to the beneficiary for the latter’s signature when the beneficiary receives a partial or full distribution of the estate assets. The rights and obligations of both the executor or trustee and beneficiary with respect to the distribution are usually laid out in the release. Thus, the provisions in the document will govern the release obligations.

However, a properly written release will usually have the following provisions, which if signed, will have the following effect:

• The beneficiary acknowledges that the executor or trustee has fully and satisfactorily accounted for all assets of the estate;
• The beneficiary has examined and approves the account made by the executor or trustee with the same force and effect as if such account had been filed with, audited, adjudicated, and confirmed by the court;
• The beneficiary waives the filing of any accounting;
• The beneficiary acknowledges the receipt of money paid as partial or full distribution of his interest;
• The beneficiary releases and discharges the executor or trustee from all liability for all matters related to the administration of the estate;
• The beneficiary agrees to refund the executor or trustee of any portion of the distribution to which the beneficiary is not properly entitled, and to indemnify for claims made and to reimburse the executor or trustee for alle expenses and costs incurred in connection with such claims, to the extent of the distribution received by the beneficiary.

When the beneficiary refuses to sign a release, it usually means that the beneficiary does not agree to any or all of the above statements in the release. Thus, without a release, the executor or trustee will not be discharged from his liabilities and may be held personally liable for any alleged damages arising from the administration of the estate.

Judicial Settlement of Account

When a beneficiary refuses to sign the release, the trustee or executor, in order to be discharged from liability for administering the trust or estate, must file a judicial settlement account with the court for approval. This will entail additional legal expenses which can be taken from the trust. As a consequence, residuary beneficiaries may receive smaller amounts due because the estate will incur additional legal costs than expected due to the filing of a judicial settlement of account.

The judicial settlement of account will usually contain several schedules showing the principal received, income received, realized increases or decreases in principal or income, administration expenses, unpaid administration expenses, distributions of principal and income, executor or trustee commission computation, statement of interests, summaries of principal and income, and the ending bank balances to see if it coincides with the principal and income summaries.

When a beneficiary refuses to sign a release, it can be a problem for the executor or trustee. When this happens, it is important to have proper recording and accounting of expenses to ensure that, in case the account has to be filed with the court, it will be accepted.

Should you need assistance in handling estate or trust accounting matters, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].