Category: In the News
Handwritten Wills/Codicils are certainly quite rare, particularly for people with means. In certain circumstances, and particularly where the testator had made a pre-existing Will, the presence of a subsequent handwritten Will or Codicil can suggest the presence of suspicious circumstances.
As Paul Trudelle blogged last week, Larry King apparently executed a secret handwritten codicil in 2019 that divided his roughly $2 million estate amongst his five children, to the exclusion of his wife, Shawn King. Mrs. King apparently intends to challenge the validity of the 2019 codicil.
In Ontario, an amendment to a Will is referred to as a “codicil” and it is considered to be a Will, for the purposes of the Succession Law Reform Act. A handwritten Will, in Ontario, is referred to as a “Holograph Will” and the only requirement is that it be made wholly by the testator’s own handwriting and signature, without formality, and without the presence, attestation or signature of a witness. The fact that a Holograph Will is usually made without witnesses will often cause litigation, particularly if there are suspicious circumstances surrounding its execution and/or discord in the family of the deceased.
If Mr. and Mrs. King resided in Ontario, Mrs. King could pursue various claims in challenging the validity of the 2019 codicil (subject to the available evidence), including:
- Lack of requisite testamentary capacity on Mr. King’s part;
- Mr. King being subject to undue influence from any or all of his children (or other third parties);
- Presence of suspicious circumstances in the execution of the codicil; and
- Presence of fraud in the execution of the document (which is pleaded quite rarely, as there are serious costs consequences for those that make such an allegation but are unable to prove it).
It will certainly be interesting to see how this matter unfolds, particularly taking into account that $2 million is not a significant amount when the costs of litigation are taken into account.
Interestingly, some sources suggest that his Estate is actually worth $50 million, which sounds a lot more accurate!
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I recently blogged about Biogen Inc. and the drug in development that is said to be the first treatment that could show decline in people with Alzheimer’s disease.
Since I wrote about this in November, 2020, Biogen has continued working towards the coveted regulatory approval from the U.S. Food and Drug Administration (FDA).
Despite a panel of experts at the FDA voting against the drug in November, 2020, the FDA has extended the review period of the drug by three months. For reference, the panel voted “no” to three questions related to whether a single successful large trial of the drug was sufficient evidence of the drug’s effectiveness, given the clear failure of a second large study.
Although the FDA is not obligated to follow the recommendations of the panel, it usually does.
Notwithstanding the FDA’s history of following the panel’s recommendations, this extension raised some hopes that the drug may still be approved which reflected in an increase of Biogen’s shares by 8% premarket.
Obtaining regulatory approval would certainly be of benefit to the shareholders of Biogen. However, if the drug is actually effective, it would certainly change the lives of many people afflicted with Alzheimer’s today.
Stay tuned for more updates!
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Broadcaster Larry King is once again in the news. This time, he is making news, not reporting on it.
Larry King died on January 21, 2021, at the age of 87. He left a will made in 2015. However, he apparently made a new, handwritten will dated October 17, 2019, just two months after he filed for divorce from his seventh wife, Shawn Southwick King. They were married for 22 years. In the codicil, he left his estate to his five children (two of whom died after the 2019 will was written) and cut Shawn out of his estate plan.
Shawn is now challenging the validity of the 2019 will. Shawn alleges that Larry King was of “questionable mental capacity” when the 2019 will was signed, and was subjected to undue influence from Larry King Jr. Shawn also alleges that the terms of the 2019 will violate the terms of two postnuptial agreements entered into by Larry King and Shawn
There is also a contest as to who should be appointed as estate trustee. Larry’s son, Larry Jr. is asserting that he be appointed as administrator. Shawn is also claiming entitlement to be administrator. Shawn is claiming that although Larry King filed for divorce, he was not pursuing it, and the couple was still speaking, engaged in counselling and there was a possibility of reconciliation. She argued that Larry Jr. was never involved in Larry King’s career or business. Apparently, Shawn was named as administrator in the 2015 will.
Larry King’s estate is estimated as having a value of $2m US.
Larry King was once quoted as saying, “Getting your house in order and reducing the confusion gives you more control over your life. Personal organization somehow releases or frees you to operate more effectively.” Unfortunately, his estate plan may not have been fully in order.
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In Tuesday’s blog, I scratched the surface of the recent battle between titans of Wall Street and a social media community over shares of GameStop, a brick-and-mortar video game retailer. The enormous volatility seen in GameStop’s share price, fluctuating between $20 and $350 in a matter of only a few weeks, led to some investors profiting handsomely, leaving others, including certain institutional investors, to foot the bill so to speak. Today’s blog discusses the obligations of a trustee to prudently invest trust capital and to generally avoid high-risk, high-reward strategies unless specifically instructed.
Section 27(1) of Ontario’s Trustee Act provides that a trustee investing trust assets “must exercise the care, skill, diligence and judgment that a prudent investor would in making investments” – colloquially known as the Prudent Investor rule. A further subsection of the Trustee Act, section 27(5), sets out a non-exhaustive list of criteria that a trustee is to consider when making investment decisions which include, among others, the expected total return on investment.
A savvy but risk-prone hypothetical trustee might have viewed the GameStop saga as an opportunity to earn significant returns for the benefit of the trust. Of course, had such a trustee “gotten in early” when the share price was still low and also correctly predicted the meteoric rise, the trust in question might well have enjoyed a capital return many times the size of their initial investment. Great!
However, the opposite consideration is relevant to any discussion of a trustee’s obligation as a prudent investor. What if the trustee took steps to invest in GameStop or any other volatile security, without reasonable justification for doing so, and suffers substantial losses? What recourse, if any, is available to the beneficiaries of a trust that suffers such losses?
In the ordinary course, a trustee may be personally liable for any investment losses as a result of imprudent investment decisions. Whether the trustee committed a breach of his fiduciary duty by choosing to invest in high-risk, high-reward securities is a nuanced question. In carrying out their obligation as a prudent investor, a trustee must consider several factors, including:
- The terms of the trust instrument or Will including any investment guidelines contemplated by the grantor or testator;
- The guidelines of any investment plan or strategy relied on by the trustee in making investment decisions, including any such plan prepared by a professional advisor; and
- The nature and extent of the investment made and the loss suffered.
A consideration of the factors above will determine whether a trustee’s actions constitute a breach of fiduciary duty. Hypothetically, a trustee may be directed by the terms of the governing instrument to invest a certain portion of the capital into specific types of assets, which could include volatile securities, with asset diversification as a main goal.
Although such investments might not ordinarily be viewed as “prudent”, section 27(9) of the Trustee Act provides that a trustee is not authorized to act in a manner that is inconsistent with the terms of the governing instrument. Although the trustee has some discretion in terms of the choice of investment, they may nonetheless be directed by the instrument to engage in risky transactions.
As such, the risk of personal liability to a trustee who was directed to invest a small share of the total capital of a trust into high-risk securities, as compared to a trustee who unilaterally decides to invest half of the trust capital into similar assets, will be considerably different. Provided the conduct of the trustee is in accordance with the directions and reasonable professional guidance offered to them, it is unlikely that a trustee will be personally liable for investment losses.
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Last Friday, February 12, 2021, the Attorney General for Ontario announced changes to the Estates Act that raise the limit of a “small estate” to $150,000.
“Right now, the process to apply to manage an estate in Ontario is the same, whether the estate is worth $10,000 or $10,000,000. The process can be time-consuming and costly, deterring people from claiming smaller estates – and that isn’t right,” said a press release.
The new regulation, introduced in the Smarter and Stronger Justice Act, does not come into effect until April 1, 2021, but will make it easier to file a probate application for small estates and removes the requirement for a security bond in many small estate probate applications.
Among the changes to simplify the probate process for small estates are allowing for the completion and filing of a new simpler application form; removing requirements for certain supporting documents to be filed (for example, a commissioned affidavit of service); and more guidance for applicants on the process to file a probate application for a small estate.
Estate administration tax is still applicable to the portion of the small estate that is larger than $50,000, but these changes to procedure represent a positive step for grieving families who might otherwise leave a small estate unclaimed.
It’s worth noting that banks and other financial institutions often can’t take instructions from an estate trustee unless probate has been granted. By raising the limit for small estates, and simplifying the probate procedure, many estates will be settled sooner and with fewer burdens or costly hurdles for grieving families.
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Ian Hull and Daniel Enright
Late last month, I and many of my colleagues of the Millennial age were treated to a flurry of headlines that many of us in that age bracket were able to piece together, but which might have left those of a more senior generation scratching their collective heads. The battle between Wall Street and an army of social media users over stock trading perhaps led to some new terminology entering the lexicon of those beyond the Millennial age group. No doubt the words ‘Reddit’, ‘subreddit’, and ‘GameStop’ caused a few crossed eyes. Allow me to explain.
GameStop Corporation is a publicly traded company that, for much of the 1990s and early 2000s, operated a slew of brick-and-mortar retail stores selling video games, consoles, and other associated merchandise worldwide. As a bright-eyed middle-schooler during the height of GameStop’s market control, many a Friday night was spent wandering the aisles with friends eagerly looking to spend my allowance on the next craze.
As a result of a shift in the direction of the video game industry towards digital and online fare, as well decreased engagement as a result of the pandemic, GameStop’s brick-and-mortar sales model, and retail models more generally, saw a historic decline in sales and revenue. As the demand for GameStop’s business model declined, so did its share price.
This decline did not go unnoticed by certain savvy Wall Street hedge funds and other institutional investors. Shares in GameStop were a popular purchase among “short sellers” looking to turn a profit as a result of the company’s misfortunes. Briefly summarized, short-selling occurs when an investor borrows a particular stock from a stockholder, then sells that stock to a third-party investor willing to pay current market price for the security, on the short-seller’s expectation that the share price will have decreased by the time the loan from the original stockholder is called. The short-seller would then repurchase the borrowed stock from the third-party investor at the now-lower share price before returning ownership to the original stockholder and earning a profit on the difference.
In the case of the GameStop saga, the short-selling attempts by some large hedge funds and institutional investors did not proceed as planned. Members of a specific community under the Reddit platform – individually, a ‘subreddit’ – discovered in late 2020 that GameStop stock had been ‘shorted’ to an unprecedented degree. In essence, hedge funds and investors had bet significant sums on the continued decline of GameStop, intending to turn a profit as the share price was expected to continue dropping.
Members of the ‘WallStreetBets’ subreddit saw an opportunity to ‘squeeze’ the investors by collectively purchasing a significant portion of the available stock in GameStop, driving up the price-per-share to historic highs and decimating the intended ‘short’. The price-per-share ballooned from around $20 in early 2021 to a staggering $350 per share by the end of January. Many of the investors and hedge funds who had bet on the price decreasing from $20 were now compelled by their loan obligations to repurchase shares at a price many times higher than their initial capital investment, incurring significant losses in the process.
Although the frenzy around GameStop and other publicly-traded companies such as AMC has died down in recent weeks, as of today’s date GameStop is still trading at around $51 per share, more than double the share price at the beginning of the year. The incident has also drawn the ire of securities regulators as well as the US Congress. Game over?
The next blog in this series will tie in the concepts of short-selling and the fundamentals at play in the GameStop incident to the obligations of fiduciaries to act as prudent investors.
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Eric Schwam died on December 25, 2020, at the age of 90. He died leaving a will that provided a substantial bequest to the French village of Chambon-sur-Lignon. The gift was in thanks for the village’s assistance to Schwam and his family who were sheltered in the village during World War II as they escaped Nazi persecution.
According to a news report in The Times of Israel, Schwam and his family, originally from Austria, were taken in by the village townsfolk. They were amongst over 2,500 Jews harboured by the village during World War II. Previously, the village was honoured by Israel’s Yad Vashem Holocaust Remembrance Center as “Righteous Among the Nations”. (According to the Yad Vashem website, 3,000 to 5,000 Jews were protected by the village.) The village has received other such honours.
Schwam’s family arrived in Chambon-sur-Lignon in 1943, and were hidden in a school. The family remained in the village until 1950. Schwam then left the village, and studied pharmacy.
The mayor declined to state how much was given to the village of 2,470 (as of 2017). However, it is estimated that the gift was of $2m Euros. The funds are to be used for educational and youth initiatives, including scholarships.
Sometimes good deeds go unpunished.
Have a great weekend.
Technology is often considered as a tool more common among younger generations, with older individuals less likely to have embraced the internet and smartphones that, for many of us, have become important parts of our lives.
As lawyers know, the court system and legal profession have embraced technology in a number of new ways over the past year. From Zoom hearings to probate applications filed by email, we have had to adapt to better use technology in the practice of law. Recent news articles also suggest that the pandemic appears to be increasing the use of technology among older adults. In particular, the last ten months are noted to have seen:
- Acceptance of applications typically used primarily by millennials seeking convenience by other groups;
- For many, home delivery has become a “necessity”;
- Video chat has become a “lifeline for older adults”, who may otherwise be totally isolated;
- Increased accessibility to telemedicine and virtual caregiving support; and
- Online education for individuals of all ages, whether geared to enhance career potential or otherwise.
Many of these trends have the potential to assist seniors in aging in place during the COVID-19 pandemic, which no doubt has become an increasingly attractive option in light of the tragic situation at many long-term care facilities. Increased technology use by seniors is noted to be a positive that has emerged as a result of COVID to make independent living more comfortable and safer. There are also a number of online resources available with recommendations for seniors wishing to safely age in place, including this review of possible Home Modifications available through Family Assets, a resource for senior care.
It will be interesting to see how our use of technology continues to evolve to assist individuals at all stages of life during the pandemic and beyond.
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Who is ready for some good news? Our firm has been interested in the issue of organ donation for some time now. In 2012, we blogged about whether P.E.I. may be the first province in Canada to automatically enroll all of its people as organ donors until you chose to actively “opt-out”. In 2014 and 2019, we blogged about Nova Scotia’s efforts in this regard.
Today, we are happy to report that this is now the new reality in Nova Scotia as of January 18, 2021.
The Human Organ Tissue and Donation Act was passed in April, 2019. The Act, when it came into effect this Monday, meant that everyone in Nova Scotia are now considered to a potential organ donor until they “opt-out”. This new “opt-out” system is the first of its kind in North America according to the Huffington Post. Ontario, like everywhere else, has an “opt-in” program where you have to actively sign up in order to be considered as a potential organ donor whereas the “opt-out” system is the opposite of that. Nova Scotia is hoping that this will dramatically increase the rate of organ donation in the province like the 35% increase that has been noted in certain European countries.
In order to balance and respect the wishes of each individual, the director of the organ donation program has indicated that the known wishes of an individual will be respected even if he/she has not formally opted out.
This is an issue that is personally meaningful to me because of the statistics surrounding organ donors and organ recipients of colour. People of colour tend to be underrepresented within “opt-in” systems of organ donation. According to the Gift of Life, while race and ethnicity is not determinative of a match, a match is more likely to be found within one’s own ethnic community because of compatible blood types and tissue markers. 60% of patients waiting for a transplant are from communities of colour. I, myself, am registered with the Gift of Life and I can attest to how easy and painless it was to sign up.
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This week marked the airing of the final episodes of Jeopardy! featuring Alex Trebek as host.
Alex Trebek died on November 8, 2020 at the age of 80. Alex announced in March 2019 that he had stage IV pancreatic cancer. Despite this, he continued his hosting duties. He taped his final episode on October 29, 2020, which is being aired on January 8, 2021.
Alex’s openness and honesty about his diagnosis had a significant impact on awareness of pancreatic cancer and the need for early screening. Alex has spoken publicly about the need for more attention and awareness of the disease. He regrets not recognizing sooner the symptoms of persistent stomach pain, mid-back pain, unexplained weight loss and yellowing of the skin and eyes. See his public service announcement, here.
Alex was born in Canada. He received the Order of Canada in 2017. He also received many other awards and recognitions honouring his contributions to television and geographic education.
To me, Alex Trebek is and always will be Jeopardy! My father loved the program, which he called, in his French accent, “G-O pardy!”. My mother, at 94, is still an avid fan. We know better than to try to call her between 7:30 and 8 pm.
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