Trustees should obtain a receipt and release before making distributions of trust property. The receipt adds clarity by documenting the value given and received. The release reduces trustee liability due to beneficiary claims. An effective receipt or release is made with knowledge of the matter. For this reason, the document should detail the specifics of the gift, as well as the issues or liabilities that are being released. Further, a beneficiary providing a receipt and release should be given sufficient time to review the document and consult with their own attorney. As a strategy to ensure that each beneficiary signs a receipt and release, avoid making final distributions of property to a beneficiary until the receipt and release is signed. Note that if the trust holds back some funds to cover future liabilities, the receipt and release should describe the terms of the hold-back.
The executor of a simple, small estate that is not subject to probate should try to obtain receipts and releases on any property given away. If an estate is subject to probate, the receipt and releases should be prepared in a form that allows submission to the probate court. As with trust distributions, it is best to delay making final distributions of trust property until the beneficiary has signed a receipt and release.
When an estate is administered through a court probate process, receipts and releases should be prepared for submission to court. Further, the information underlying the receipt and release will usually be taken from an estate accounting or inventory. As with all receipts and releases, in a probated estate, it is important that the information accompanying the release informs the signing party sufficiently to make knowing releases. Discuss the issues of the estate with an attorney to determine appropriate language for your releases.