08 Dec I’m getting a smaller inheritance. Is something fishy going on?

Q. The attorney representing the estate of my late uncle sent me and my siblings probate letters indicating that we would each receive $32,000 pursuant to a special needs trust set up by my deceased grandmother on his behalf. It included a letter that would release the trustee from any liability. Two other parties are receiving more than $100,000. After everyone signed, the attorney told us we would receive less because of a bank error. I asked him for written proof from the bank and he got agitated. Do I have to contact an attorney?
— Beneficiary

A. There are several things to unpack here.

You refer to the documents you received as “probate letters,” but then you say the $32,000 bequest was “pursuant to a special needs trust” set up by your grandmother for the lifetime benefit of your uncle.

These details suggest that the special needs trust was a testamentary trust established under your grandmother’s will rather than a standalone trust established by its own trust agreement, said Tom Szieber, a trusts and estates attorney at Chiesa Shahinian & Giantomasi in West Orange.

He said the “releases,” based on your description, sound like what are commonly known as “refunding bonds and releases,” or, when in connection with a trust, “trust receipts.”

These documents generally serve several purposes, Szieber said.

By signing one, a beneficiary confirms receipt of the amount set forth in the document, releases the executor or trustee from responsibility for the disbursed assets, and confirms that the beneficiary will refund to the estate or trust a pro rata portion of his or her share of the estate or trust if a liability of said estate or trust emerges in the future, he said.

“Although the beneficiary is `confirming receipt’ of assets by executing this document, it is commonplace for the estate or trust to request the beneficiary’s signature prior to actually making the distribution,” he said. “With regard to an estate, New Jersey law actually requires that a beneficiary of an estate sign a refunding bond and release before receiving his or her distribution and the same procedure is routinely done for trust distributions as well.”

So, Szieber said, the document that you were asked to sign sounds like the standard legal document that beneficiaries sign before receiving a distribution from a trust.

“While it is understandably frustrating for you to receive less money than originally advised, it may not be because of dishonesty or malfeasance,” he said. “If it was, in fact, a bank error that resulted in you being prematurely and incorrectly advised of the amount to which you are entitled, then you have little recourse if the later value is the correct one — assuming, of course, that you mean a clerical error and not an error that caused depletion of assets.”

If, however, missteps by the fiduciary — the trustee or executor — caused a depletion of assets, then it is certainly advisable that you speak to an attorney to investigate whether the fiduciary has breached their duty to administer the trust or estate properly, he said.

“You should send the requested letter to the attorney asking for an explanation of the bank error and why your distribution is less than you were previously advised, and depending upon the attorney’s response you will need to decide whether to accept the explanation or seek the advice of your own counsel,” he said.

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This story was originally published on Dec. 8, 2022.

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