Category: In the News
Earlier this year, the CEO of Scholastic Inc., M. Richard Robinson Jr., unexpectedly died leaving his family and many others shocked about his succession plans.
Scholastic Inc. is the publishing house behind many well-loved children’s books, including The Magic School Bus, Goosebumps, and Captain Underpants. It also published the cult-classics Harry Potter and The Hunger Games, contributing to the $1.2 billion company valuation.
Scholastic Inc. was founded by Mr. Robinson’s father and so naturally his two sons, John, 34, and Maurice, 25, expected to inherit the family business. However, they must have been surprised when the contents of their late father’s Will were eventually revealed.
Mr. Robinson left all of his personal possessions and control of Scholastic Inc. to Iole Lucchese, the company’s chief strategy officer.
Having never discussed testamentary intentions, the sons were left with virtually nothing, not even an explanation. Both sons were perplexed upon the revelation, not being able to understand why their father made the decision to cut them out of his Will, especially since they had actively been in each others’ lives.
Their mother and Mr. Robinson’s ex-wife, Helen Benham, was also disappointed, as she had worked for Scholastic Inc. for over 30 years and had rekindled an amicable relationship with Mr. Robinson prior to his death. Mr. Robinson had allegedly told Ms. Benham, “you care more about Scholastic than I do” on several occasions, so she must not have been prepared for the cold shoulder she received upon his death.
While it may be a difficult pill for Mr. Robinson’s family to swallow, given that the American succession laws will be applied, it is difficult to know how the lack of provisions made for his family will be treated. In Ontario, however, even if we may expect parents to leave behind something for their children, our succession laws do not require a parent to do so.
In Ontario, there is a strong emphasis on testamentary freedom and in many cases, therefore, individuals are not subject to any legal and moral obligation to provide for their family if they do not wish to. This was made clear in Verch Estate v. Weckwerth, where the Ontario Court of Appeal found that independent adult children who are excluded from their parents’ Will do not necessarily have grounds to make a moral claim against the estate. Courts typically only intervene when dependant spouses or children who were being supported prior to the death demonstrate that a testator failed to make adequate provision for their continued support after death. As a result, there is therefore no right of inheritance in Ontario.
While John and Maurice may plan to pursue legal action, it remains to be seen whether they will be successful or not.
Thanks for reading,
Ian Hull & Ekroop Sekhon
Our blog has previously covered the issue of inheritance tax.
As a reminder, inheritance tax is charged on estates of a certain value or greater on a percentage basis. Smaller estates (different amounts depending on the jurisdiction) may be exempt, with the applicable tax charged on the portion of the estate exceeding the exemption limit. Inheritance tax does not apply to Canadian estates or their beneficiaries. While we see individuals go to great lengths to avoid the payment of Estate Administration Taxes payable on assets administered under a probated will in Ontario and other provinces, the rate (at approximately 1.5% in Ontario) is significantly lower than what we see in jurisdictions where estates are subject to inheritance tax (up to 55% in Japan).
In particular, we have covered a number of developments in U.S. inheritance tax, which saw some fluctuations during Donald Trump’s presidency. Trump had proposed the elimination of inheritance taxes all together. More recently, President Joe Biden’s government has been considering a number of measures to increase the taxation of large estates: the reduction of the estate tax exemption to $3.5 million (from $11.7 million), increasing inheritance tax rates from 40% to 65%, and/or increasing taxes on capital gains in respect of inherited assets. News reports suggest that there has been resistance to the proposed increased tax burden to estates as the proposed increased capital gains tax makes its way through congress. However, the measures proposed by President Biden could generate an additional $213 billion to $400 billion over the next ten years.
Having just seen another federal election in Canada, it is interesting to follow along with how inheritance tax has been used as an important part of political agendas in other jurisdictions. It will be interesting to see if inheritance tax or other taxes applied to estates become part of political platforms locally in coming years, as we continue to approach the greatest ever transition of wealth from one generation to the next.
Thanks for reading,
Other blog entries that may be of interest:
Cryptocurrencies, such as Bitcoin and Ethereum, have been surging in popularity. As our colleagues have written here and here, they have raised a variety of unique considerations in the context of estate planning. However, the underlying technology in cryptocurrencies, blockchain, has given rise to a variety of digital tools beyond cryptocurrency. “Smart contracts” are one of these.
Broadly speaking, blockchain allows blocks of information about transactions to be recorded and stored on a distributed ledger. This article provides a more detailed overview of blockchain for those interested. Smart contracts are an extension of blockchain. They are programs stored on blockchain that run when certain pre-determined conditions are met, thus automating the execution of an agreement. Since the steps in a smart contract are hard coded, failure to fulfill conditions as agreed upon, prevents any progression. When conditions are fulfilled, the blockchain is updated and the agreement proceeds.
Two of the main attractions of these smart contracts is that they can serve to accelerate the transaction by removing middle-men and add a high degree of certainty to the performance of an agreement based upon the pre-established terms.
These benefits, however, should be approached with caution. The basis for the certainty arising from smart contracts is that they are hard coded, and the blockchains on which they are built rely on encryption to prevent fraud. The same certainty which is a strength can be a weakness though, as it makes changing the terms of an agreement difficult, if not impossible, in some circumstances.
Businesses advertising smart contracts in the context of estate planning are becoming more common. Potentially removing the need for executors, lawyers and other intermediaries in the administration of an estate can sound very appealing from a cost perspective.
Having said that, one should bear in mind that the law and factual matrix of an estate can and often does vary over time. Certainty can become fatal inflexibility in the face of change. A change in the law or conditions around an estate may prevent the performance of a smart contract where the coded preconditions require an impossible or illegal action.
New technologies are often exciting, and no doubt can bring positive change, but they also bring unknown risks. An abundance of caution would be well advised when using novel tools like smart contracts.
Thank you for reading and have a great day!
Suzana Popovic-Montag & Raphael Leitz
According to recent news reports, Prince Andrew has allegedly been “actively evading” service of legal documents in relation to a proceeding commenced against him in the United States. Specifically, he has allegedly stopped spending time in public areas, has moved from place to place in order to make it difficult to determine where he is currently staying, and has instructed guards at his places of residence to refuse to accept service or to allow process servers to meet with the Prince personally. As a result, a hearing has been scheduled to address the issue of whether service upon Andrew by other means is effective in light of his apparent evasion of personal service.
In estates matters, we sometimes see disgruntled beneficiaries or estranged family members attempting to evade service. In Ontario, our Rules of Civil Procedure offer several tools for addressing situations in which respondents take active steps to evade service. Rule 16.04 permits a party to request an order for substituted service where “it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules”, and, “where necessary in the interest of justice, [the court] may dispense with service” altogether. Alternatively, where unsuccessful steps have already been taken to effect service, Rule 16.08 permits a court to make an order validating service if “the document came to the notice of the person to be served; or the document was served in such a manner that it would have come to the notice of the person to be served, except for the person’s own attempts to evade service.” In either scenario, the materials filed with the court should outline the steps taken to attempt and/or evade service and explain why proper service is impractical (such as a detailed affidavit from the process server).
While the Rules of Civil Procedure still require personal service with notice of some originating processes and other documents, we have seen some relaxation of this standard during the COVID-19 pandemic, when personal service has been unsafe and/or impractical.
Thank you for reading,
The title of today’s blog comes from the opening line of Derek Thompson’s article, Why Americans Die So Much, published in The Atlantic.
In the article, Thompson observes that U.S. life spans over the past 30 years are falling behind those of other similarly wealthy countries. The author looks at a September 2021 study by the National Bureau of Economic Research which shows that Americans die earlier than their European counterparts in every age group. American babies are more likely to die before they turn 5 compared to Europeans; American teens are more likely to die before they reach 20 than their European peers, and American adults are more likely to die before they reach 65, compared to Europeans. Overall, Europeans have a longer life expectancy.
And the study’s numbers go back several decades. The results are not due to recent COVID deaths, or the recent drug overdose crisis.
Thompson says that finding a straightforward explanation is hard. One factor is gun violence, which is more prevalent in the U.S. Another might be motor vehicle accidents: Americans drive more than residents of other countries.
The study makes three important findings:
- European mortality rates are consistent between rich and poor. This is said to be due to health improvements, which are better disseminated in Europe. The poor in America do not all enjoy the benefit of such health improvements. In America, black teenagers in the poorest areas are twice as likely to die before they turn 20 than those in the richest areas. The effect of poverty on lifespan is substantially higher in the U.S.
- Overall, Europeans live longer than Americans, even when comparing rich Americans to rich Europeans. This, it is said, “says something negative about the overall health system of the United States”.
- On a brighter note, longevity amongst Black Americans is improving, and the gap between white life expectancy and Black life expectancy is closing. This is said to be due to advances in science and technology, which are now more readily accessible to all. In addition, reductions in air pollution have helped, as Black Americans were more likely to live in more polluted areas. Other factors contributing to the closing of the gap include increased drug deaths (more prevalent amongst white Americans), and a decline in homicides, which disproportionally kill Black Americans.
Thompson concludes his article by calling for greater income redistribution and universal health care. “For decades, U.S. politicians on the right have resisted calls for income redistribution and universal insurance under the theory that inequality was a fair price to pay for freedom. But now we know that the price of inequality is paid in early death – for Americans of all races, ages and income levels.”
Thank you for reading.
Our blog has been following Britney Spears’ conservatorship proceeding closely in the recent months. So far, the #FreeBritney movement has seen significant progress through the appointment of a new lawyer for Britney, and very recently through Jamie Spears’ petition to end the conservatorship. Even though Britney is still under a conservatorship of property and of person, the iconic popstar surprised the world with her engagement to long-time boyfriend, Sam Asghari.
This fantastic news follows Britney’s stunning court testimony back in June that she wanted to be able to get married and have a baby but that she was told that she could not do so because of the conservatorship.
To celebrate Britney’s engagement, I wanted to share Justice Benotto’s words in Calvert (Litigation Guardian of) v. Calvert, 1997 CanLii 12096, as affirmed by the Court of Appeal in 1998 CanLii 3001, with leave to the Supreme Court of Canada dismissed:
“A person’s right of self-determination is an important philosophical and legal principle. A person can be capable of making a basic decision and not capable of making a complex decision. Dr. Molloy, the director of the Geriatric Research Group and Memory Centre and associate professor of geriatrics at McMaster University, said:
Different aspects of daily living and decision-making are now viewed separately. The ability to manage finances, consent to treatment, stand trial, manage personal care, make personal care or health decisions, all require separate decision- making capabilities and assessments.
The contract of marriage has been described as the essence of simplicity, not requiring a high degree of intelligence to comprehend: Park, supra, at p. 1427.”
While the foregoing passage may not sound particularly romantic, the notion that marriage is the essence of simplicity seems rather befitting to the intimate decision that was made between Britney and Sam.
Britney is not yet a “freed” woman, but as her song goes,
”All I need is time (is all I need)
A moment that is mine
While I’m in between”.
Thanks for sharing your engagement moment with us Britney! Click here for the video of “I’m Not a Girl, Not Yet a Woman”.
New Medical Assistance in Dying (MAID) legislation came into force on March 17, 2021, which provisions include expanding eligibility to those whose death is not reasonably foreseeable. Although the new legislation temporarily, until March 17, 2023, does not allow those with a mental illness as their sole underlying medical condition to be eligible for MAID, the statute obliges the Minister of Health and Minister of Justice to initiate an independent expert review “respecting recommended protocols, guidance and safeguards to apply to requests for medical assistance in dying by persons who have a mental illness.”
Further to this mandate, the Government of Canada recently announced that an Expert Panel on MAID and Mental Illness has been established to undertake the review. The announcement includes a link to the member biographies, and describes them as reflecting “a range of disciplines and perspectives, including clinical psychiatry, MAID assessment and provision, law, ethics, health professional training and regulation, mental health care services, as well as lived experience with mental illness.”
The Government news release also highlights the critical importance of this work, with the Minister of Health quoted as saying:
“Protecting the vulnerable, including those suffering from mental illness or in crisis, is a priority for the Government of Canada. That is why the work of the Expert Panel is so important to me. The Expert Panel will provide us with independent, objective advice on safe and appropriate ways to assess and provide MAID to individuals living with mental illness who are seeking this avenue to end their suffering. The work of the Expert Panel will be difficult, but will provide Canadians with reassurances that we are balancing justice with compassion.”
The Expert Panel’s final report containing its recommendations is due by March 17, 2022. We will be sure to keep an eye out for further updates on this issue.
Thanks for reading and have a great day,
An almost ubiquitous figure in pop culture, Bob Ross has been immortalized through references as broad-spanning as t-shirts quoting his famous line, “happy little accidents”, to a cameo in the Marvel action hero movie, Deadpool.
Bob Ross’ long-running series, “The Joy of Painting”, which ran from 1983 until his untimely death in 1994, resulted in the production of thousands of original artworks. The ownership of this substantial art collection was left in the hands of Bob Ross Inc. (“BRI”), as discussed in a previous blog.
Recently, a documentary was released on Netflix, “Bob Ross: Happy Accidents, Betrayal & Greed”, bringing the estate of Bob Ross back into the public eye. It explores behind the scenes Bob Ross’ legacy, delving into the disputes surrounding the use of his name and likeness following his death.
Our previous blog on Bob Ross’ estate explained that, following his death, ownership and control of BRI fell to his business partners, Annette and Walt Kowalski. Bob Ross was known for his easy-going and kind-hearted personality. However, the documentary exposes tensions in the inner business workings of the multi-million dollar empire that was the Bob Ross trademark.
By the end of his life, Bob Ross was allegedly at odds with the Kowalskis and their vision for his brand. Through his will, Bob Ross tried to create a trust in the name of his brother, Jimmie, and son, Steve, that would give them control of his interest in BRI, as well as complete ownership of his name and likeness.
Bob Ross was known for his ‘alla prima’ technique of wet-on-wet paint, which allowed him to be creative in ‘using’ his mistakes to create solutions. Unfortunately for the beneficiaries of the trust, the ink on a contract dries quickly, and the partnership agreement with the Kowalskis was one ‘mistake’ Bob Ross could not fix.
The litigation that followed his death resulted in a settlement granting the Kowalskis complete control of BRI pursuant to the terms of its partnership agreement. Steve, the son, attempted to renew the litigation in 2019 on grounds of an undisclosed term of the trust agreement, granting him exclusive rights to the name and likeness of Bob Ross. The US federal court ruled in favour of BRI, as the plaintiff could not own property that the trust never actually had a legal right to.
The outcome was no doubt disheartening for Steve. However, the law upheld what was ostensibly a valid and enforceable contract, the partnership agreement.
Business vehicles such as partnerships and corporations are commonplace. However, the articles of incorporation of a corporation, for example, can restrict the sale and/or transfer of shares. In entering any kind of business structure, it is always wise to plan ahead. Where so desired, make sure your beneficiaries can benefit from your interest in a business, and remember your estate may not have the power to change or undo contracts you were a party to.
Thank you for reading and have a great day!
Suzana Popovic-Montag & Raphael Leitz
A baby in a swimming pool reaching for a $1 bill. Music lovers would instantly recognize this description as the album cover of Nirvana’s 1991 album “Nevermind.”
Until recently, Spencer Elden – the baby in question – embraced the fame that came with being on the cover of one of the most recognizable albums of all time. Elden even recreated the notorious photo several times over the last 30 years to mark the album’s 10th, 20th, and 25th anniversaries. In those photos, Elden is wearing swimming trunks.
Earlier this week, Elden made headlines when the media learned that he was suing the parties involved for sexual exploitation. Elden argues that his parents never authorized the use of his photograph for the Nirvana album, and that the band used the image to promote their music at his expense. Elden is seeking $150,000.00 USD in damages from each of the 15 defendants, which include the photographer Kirk Weddle, the surviving band members, and Kurt Cobain’s Estate.
Elden’s lawsuit has many people wondering: can an Estate be sued 30 years after an incident took place?
In California, where Elden began his lawsuit, victims of sexual abuse crimes who were children at the time of the alleged incident have until their 40th birthday or 5 years from the date that they discovered their abuse to file a civil action.
What if this claim had been commenced in Ontario? On March 9, 2016, the Limitations Act, 2002, S.O. 2002, c. 24 Sched. B was amended to remove all limitation periods for civil claims based on sexual assault. Therefore, assuming that a judge would find that Elden’s lawsuit can be properly classified as sexual abuse, Elden would be well-within his rights in bringing this claim.
However, if a judge ultimately found that Elden’s claim is not a civil claim based on sexual assault, different limitation periods would apply. Generally, the Limitations Act, 2002, provides an individual with two years from the date on which a claim is “discovered” to commence a claim before it is statute barred. However, individuals intending to commence a claim against someone who has died, such as Kurt Cobain, must also consider the much stricter limitation period imposed by section 38 of the Trustee Act, R.S.O. 1990, c. T.23.
Section 38 of the Trustee Act imposes a strict two year limitation period from the date of death for any individual to commence a claim against a deceased individual in tort. This limitation period is much more strict, as it is not subject to the same “discoverability” principle as the limitation period imposed by the Limitations Act. We have previously blogged about the limitation period imposed by section 38 of the Trustee Act here.
It remains to be seen whether Elden will be successful in his claim. However, this case should serve as a reminder to Estate Trustees and solicitors that Estates may be held accountable for events that took place well before the Deceased’s death, depending on the nature of the claim.
Thank you for reading,
Finally, the 2020 Olympics appear to be about to begin (at the time that this is being written).
The Tokyo Olympics will have 339 medal events. Approximately 5,000 medals have been minted. The medals are made from recycled materials.
This year, for the first time in recent memory and due to COVID concerns, athletes will be putting their medals around their own necks.
According to International Olympic Committee regulations, each medal must contain a depiction of Nike (the Greek goddess of victory, not the swoosh), the official name of the Games (eg. XXXII Olympiad Tokyo 2020) and the Olympic five rings symbol.
Although the medals are probably priceless to the winner, they do have an actual value. The cost of the materials used to make the medals is said to be $1,010 CDN for a gold medal, $640 CDN for a silver medal, and $5 CDN for a bronze medal. The gold medal contains six grams of gold plating over silver, the silver medal is all silver, and the bronze medal is made of brass. The Olympic Committee stopped giving out pure gold medals after the 1912 Olympics.
The medals clearly have a value beyond their cost to produce. Most notably, one of Jesse Owens’ 4 gold medals from the 1936 Berlin Olympics was sold in 2013 for over $1.4m US.
On eBay, an original silver medal from the 1906 Olympic Games is available for $15,289 CDN. Replica medals from most Olympic Games are available on eBay for about $35.00 CDN.
In addition to having value in and of themselves, Olympic medals often come with a hefty bonus from the winner’s country. Singaporean winners get $1m, $500,000 or $250,000 US for bringing home a gold, silver or bronze medal. Canadian winners get $20,000, $15,000 or $10,000 depending on where they are on the podium.
For the intriguing story of the 1972 Olympic gold medal basketball game and what lead to a term in the will of competitor Kenny Davis prohibiting his descendants from ever accepting the silver medal from the 1972 Games, see Ian Hull’s blog, here.
May you be faster, higher, stronger this weekend.