Ultimately, where a trustee administers the assets of a trust, the two most effective and important releases that are available to be obtained are (1) a Clearance Certificate from Revenue Canada; and (2) an Order of the Court in a Passing of Accounts.
Having said that, while a Clearance Certificate is of course sought in most circumstances, a formal Passing of Accounts is not always obtained by a trustee.
From a practical standpoint, where all of the beneficiaries of a trust are sui juris, the trustee has the opportunity to obtain a Clearance Certificate and then merely circulate a release to all persons with an interest in the trust. In so doing, some consideration must be given to the question of independent legal advice and whether or not it is necessary to insist that a beneficiary obtain such prior to signing the release. Without the benefit of independent legal advice, there is the question as to the strength and enforceability of any release.
None the less, in practical terms, many estates and many trusts are wound up on the basis of an execution of the appropriate release by the beneficiaries.
From a practical standpoint, when seeking a final release from a beneficiary, a copy of the accounts should be provided, and these accounts may be in an informal format or in Court format, depending on the circumstances.
A condition contained in a will to execute a release is enforceable and, upon refusal to do so, the legatee may forfeit the gift: see Williams on Wills (7th Ed.) Butterworths 1995 at p. 374. Furthermore, it has been held that, where there is a requirement in a release that it be executed within a stated time, this must be complied with: see Simpson v. Vickers (1807) 14 Ves. 341.
The form of a release or receipt depends on the nature of the gift itself. For example, when a beneficiary receives a specific bequest, he or she should only need to provide the person who presented the gift with an acknowledgement of receipt of the particular bequest received.
On the other hand, a residuary beneficiary has a right to consider pursuing a formal Court audit or should be expected to sign an acknowledgement, release and indemnity.
In conclusion, the substantive issues relating to the whole question of release, indemnity and receipt are important to keep in mind when you are dealing with the form of a receipt, acknowledgement or indemnity.
Best wishes, Suzana and Ian. ——–