Examining receipt and release agreements in trusts – How to use this technique successfully

Robert Whitman, (Professor of Law, University of Connecticut School of Law) has recently published his article entitled Sorting Out Receipts and Releases, 33 ACTEC J. 142 (2007).

Here is an excerpt from the introduction to his article:

At the conclusion of trust administration, or at any earlier time that the fiduciary plans to make significant distributions of funds to beneficiaries, the fiduciary may wish to obtain from each beneficiary a receipt and release agreement. In this article that agreement is referred to as the “R and R.” Reference in this article to the fiduciary is also meant to include those who may assist her, such as her attorney, accountant, or financial planner. * * *

To help the fiduciary avoid creating beneficiary concerns, early discussions about the R and R are strongly suggested. Ordinarily, at the time of the submission of the R and R to a beneficiary or the beneficiary group, the fiduciary will usually also be providing the beneficiary with some form of a fiduciary accounting. If the fiduciary accounting is clear, understandable, and easily read, and if from the start of administration it was explained to the beneficiary group that the R and R would be sought prior to distribution, there is likely to be less chance of a beneficiary having undue concerns. * * *

The purpose of this article is to provide fiduciaries and their lawyers with information about the general requirements and proper procedures for drafting the R and R, to suggest tactics to be used to avoid damaging the relationship with beneficiaries when seeking the R and R, and to suggest approaches for fiduciaries to maximize the benefits of the R and R for both parties. Three distinct approaches to drafting the R and R are considered below, and forms of R and Rs for each approach are provided as examples that can be adapted for use.