Receipt and Release for Beneficiaries in Ontario Estates

You have collected the assets, paid the debts and are ready to pay out the beneficiaries. Many executors in Ontario ask each beneficiary to sign a receipt and release first. It feels like a sensible way to close the file, but it is not a magic shield.

This article explains in plain words what a receipt and release is, what it can and cannot do, and what other steps protect an estate trustee. How much weight a particular release carries depends on the facts, so a lawyer should look at yours.

What a receipt and release is

A receipt and release is a short agreement signed by a beneficiary. It usually says the beneficiary has received a stated amount or asset from the estate, has seen the accounts or information about the estate, and agrees not to make further claims against the estate trustee for that share.

It is a private document between you and the beneficiary. It is not a court order, and a court has not reviewed it. Whether it holds up later can depend on matters such as whether the beneficiary understood it, whether they had the information they needed, and whether anything was left out.

What a release does not do

• It does not replace your duty to keep accurate records of the estate's assets and transactions.
• It does not remove the need for a CRA clearance certificate. Before distributing property, you must obtain a certificate confirming that tax amounts have been paid or secured.
• It does not protect you from the tax authority. If you distribute without the certificate, you are personally liable for unpaid tax, up to the value of what you distributed, and the Minister may assess you at any time.
• It does not take away a creditor's or claimant's right to follow the estate's assets into the hands of the people who received them.

Steps to take before you ask anyone to sign

• Confirm that the assets have been liquidated and that the funeral and burial expenses and debts have been paid.
• Follow the creditor notice process. After the notice period expires, you may distribute having regard only to the claims you have notice of, and you are not liable for claims you did not know about. A creditor can still follow the assets into the hands of the people who received them.
• Request the CRA clearance certificate on Form TX19 once the required returns are filed and assessed and the taxes are paid or secured. If the estate has a GST/HST number, Form GST352 is also needed.
• Prepare clear accounts: a statement of assets at the date of death and the money received and paid out.
• Give each beneficiary time to read the release and to get their own advice.

When a release is not enough

If a beneficiary refuses to sign, is unhappy with your accounts or compensation, or cannot sign for themselves, you can ask the court to approve your accounts. On a passing of accounts, notice goes to beneficiaries and other interested persons, and you swear an affidavit verifying the accounts. If the objection period expires without a notice of objection to the accounts or to the compensation claimed, judgment can be given unopposed.

Where a beneficiary is a minor, or the estate has an unborn or unascertained interest, the Office of the Children's Lawyer must or should be served on a passing. Money for a child is handled under separate rules, so do not rely on a parent's signature without advice.

If you made a mistake but acted honestly and reasonably, the court has power to relieve a trustee, wholly or partly, from personal liability for a breach of trust. That is a last resort, not a plan.

What to do next

• Gather your records, accounts and the clearance certificate before distributing.
• Ask a lawyer to draft or review the release so it matches your estate.
• Ask each beneficiary to read it, keep a copy and sign only when ready.
• Consider a court passing of accounts if the estate is large, the family is divided or a beneficiary is a minor.

Frequently asked questions