Background and Context
This guidance is about what to do when seeking one or more of the following from beneficiaries in relation to distributions from, and the administration of, an Executry or a Trust: approval of final accounting, receipt of entitlement, discharge and exoneration of intromissions, indemnification of actings and acceptance of retention.
Executors and Trustees require solicitors acting on their behalf to advise on the steps necessary to protect themselves from both anticipated and unforeseen claims, or contingent liabilities. Solicitors should act in the best interests of their clients when considering the most suitable approach in each case.
A limited set of styles covering common or straightforward situations is provided below.
Approval of Final Accounting
Subject to the qualification below, it is entirely appropriate and prudent for an Executor or Trustee and their solicitor to send a final accounting to a beneficiary setting out the extent of a beneficiary’s interest and to seek approval of such accounting by the beneficiary before embarking on a final distribution and settlement.
Pecuniary & Specific Legatees (refer to styles 1 and 2 below)
Executors and Testamentary Trustees are in most cases authorised to obtain no more than a simple receipt from a beneficiary (legatee) entitled only to a pecuniary legacy or specific item of estate. An exception arises where the estate is insufficient to satisfy the full entitlement; there the beneficiary is entitled to an accounting and the Executors or Trustees to a discharge from that beneficiary.
Legal Rights Claimants (refer to styles 3 and 4 below)
Executors are obliged to inform a potential claimant of a legal rights entitlement. It is established practice when enquiring of a claim or discharge of legal rights to advise the individual in question to consider taking separate and independent legal advice as to the nature etc of their right; the expense of which shall not require to be met by the estate.
Residuary and Trust Beneficiaries (refer to styles 5 and 6 below)
The residue of an Executry or a Trust is reliant upon the administration of the Executry or Trust by the Executors or Trustees. They are entitled to be protected against future claims or demands which could be made against them (including from third parties) in connection with their intromissions with the Executry or Trust.
Executors or Trustees may therefore seek of a residuary/ Trust beneficiary approval of final accounting and then full discharge and exoneration of their intromissions, and in appropriate cases indemnification of their actings, with respect to their management.
The practice of obtaining discharges is well established and it is prudent for solicitors to advise their Executor or Trustee clients to obtain as full a discharge as possible. It is unlikely that any discharge, exoneration or indemnification could successfully extend to fraudulent, negligent, careless or unreasonable acts by an Executor or Trustee, notwithstanding the presence and terms of any immunity provision.
An appropriate written explanation by the solicitor acting for the Executors or Trustees is advisable, in order that the beneficiary knows the facts and what they are doing. In some circumstances a beneficiary will obtain, or be advised to seek, separate and independent legal advice; the expense of which shall not require to be met by the Executry estate or Trust fund.
Delay in Settlement, Retention and Completion
It is appropriate for Executors and Trustees, and solicitors acting under their instruction, to delay making settlement to a beneficiary pending receipt of an approval, discharge or indemnification.
Executors and Trustees are also entitled to make provision for the retention of funds from an Executry or Trust to such extent and for such duration as is deemed necessary in the circumstances to protect themselves from anticipated claims.
Once an Executor or Trustee completes the administration of an Executry or Trust their powers and duties automatically terminate. If, however, there remains estate to be administered or Trust purposes to be fulfilled their powers and duties continue and it is not appropriate that these are prematurely discharged.
In the administration of an Executry or Trust, it is an established position that the solicitors’ clients are the Executors or Trustees not the beneficiaries. Where an Executry or Trust solicitor is the sole Executor or Trustee, there is a professional duty to correspond with beneficiaries and a legal obligation to account to them for the estate.
In circumstances where an Executry or Trust solicitor is an Executor or Trustee (sole or joint), it is appropriate to seek a discharge from a residuary or Trust beneficiary of their actings only in their capacity as Executor or Trustee.
It is not appropriate to seek to extend a discharge or indemnity by a beneficiary, including for any negligent administration, to any personal or professional practice capacity as Executry or Trust solicitor or legal adviser.
Executry and Trust Accounting - Demonstrative styles bank
Style 1 - Simple receipt from pecuniary legatee
I [NAME] residing at [ADDRESS] do hereby acknowledge to have received from the Executors of the late [NAME] payment of the sum of [AMOUNT] bequeathed to me by the said deceased in terms of his/her Will dated [DATE] and [GIVE REGISTRATION PARTICULARS, for example “registered in the Books of Council and Session on [DATE] or at the Commissariot of the Sheriffdom of A at B on [DATE]”].
Style 2 - Simple receipt to be granted by a specific legatee
I [NAME] residing at [ADDRESS] do hereby acknowledge to have received from the Executors of the late [NAME] the [IDENTIFY SPECIFIC ITEM] bequeathed to me by the said deceased in terms of his/her Will dated [DATE] and [GIVE REGISTRATION PARTICULARS].
Style 3 - Discharge to be granted by an individual having an entitlement to claim legal rights where individual opts to irrevocably discharge that entitlement
I [NAME] residing at [ADDRESS] hereby confirm that I have been advised of my entitlement to claim legal rights from the Estate of the late [NAME] who resided latterly at [ADDRESS] and who died on [DATE]; I further confirm that I have been informed of the estimated amount of said entitlement; I further confirm that I have been advised to take separate and independent legal advice in respect of my said entitlement but I have chosen not to do so THEREFORE I do hereby DISCHARGE, now and in all time coming, my entitlement to claim legal rights from the Estate of the late [NAME]; And I confirm that these presents are freely granted by me and are irrevocable.
Style 4 - Receipt to be granted by individual who opts to claim legal rights
I [NAME] residing at [ADDRESS] do hereby acknowledge to have received from the Executors of the late [NAME] who resided latterly at [ADDRESS] and who died on [DATE] the sum of [AMOUNT] (£ AMOUNT) being my entitlement by way of legal rights of the net moveable estate from the Estate of the said late [NAME]; I confirm that I agree the Executors’ calculation of my said entitlement; And I confirm that I was advised to take separate and independent legal advice as to the nature of my entitlement and the calculation of the same [but I have chosen not to do so] [OR] [and that I have taken such advice].
Style 5 - Discharge to be granted by residuary beneficiary in favour of executors/testamentary trustees
I [NAME] residing at [ADDRESS] do hereby confirm that I have read and approved the foregoing Account of Charge and Discharge of the Intromissions of the Executors/Trustees of the late [NAME] who resided latterly at [ADDRESS] and who died on [DATE]; I hereby acknowledge to have received payment of the sum/or transfer of the assets set against my name in the foregoing Account in full and final settlement of the share due to me of the residue of the estate of the late [NAME] in terms of his/her Will dated [DATE] and [GIVE REGISTRATION PARTICULARS]; And I do hereby exonerate and discharge the said Executors/Trustees of the late [NAME] in respect of their actings as set out in the said Account in relation to the administration of the estate of the late [NAME].
NOTE: The foregoing Discharge would be endorsed on a copy of the Account of Charge and Discharge. If a separate Discharge is required, the foregoing style would require to be adapted.
Style 6 - Discharge to be granted by beneficiary in trust
I [NAME] residing at [ADDRESS] do hereby acknowledge to have received from the Trustees acting under Deed of Trust/Will granted by [NAME] dated said Deed of Trust/Will [DATE] and [GIVE REGISTRATION PARTICULARS] the sum of [AMOUNT] (£ AMOUNT) being the whole final sum due to me as beneficiary under said Deed of Trust/Will; And I confirm that I have read and approved the Accounts prepared by the Trustees acting under said Deed of Trust/Will; And I do hereby exonerate and discharge the said Trustees in respect of their actings under the said Deed of Trust/Will.