Trust & Estate Litigation Advisory for 7/12/2011: Accord and Satisfaction is Not Available to Trustees, Since They Cannot Seek Exoneration From Liability as a Condition of Making a Distribution

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It is not uncommon for fiduciaries to seek an acknowledgment of final distribution and a release associated therewith. Obtaining such a release is permitted under Probate code section 16004.5 so long as it is given voluntarily by the beneficiary. However, a trustee cannot condition a distribution on receipt of such a release. Where a trustee seeks an accord and satisfaction, he could be held liable for requiring exoneration from liability.

In Bellows v. Bellows decided June 9, 2011 the First Appellate District, the court found that a claimed “accord and satisfaction” was invalid and not permitted under Probate Code section 16004.5. Following their mother’s death in 2008, beneficiary Donald Bellows demanded an accounting from his trustee brother, Frederick Bellows. The Superior Court of Mendocino County ordered that Frederick provide the accounting and pay one-half of the trust assets to his brother within ten days. Frederick did so, tendering a check in the amount of $30,376. Donald refused the check after reviewing the accounting, claiming that Frederick had wrongfully deducted his attorneys’ fees before dividing the trust estate. Frederick re-tendered a check that included one-half of the attorneys fees previously deducted and enclosed a letter stating that Donald was authorized to negotiate the check if he “signed and returned the enclosed receipt of final distribution.” Donald cashed the check, but did not sign the receipt. Donald then moved to compel a further accounting of the trust during the time period Frederick acted as trustee during their mother’s lifetime. Frederick opposed, claiming the letter sent to Donald acted as an accord and satisfaction. The trial court agreed, but the Court of Appeal reversed.

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Published In: Civil Remedies Updates, General Business Updates, Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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