Estate Planning for Privacy
The Supreme Court of Canada may soon be considering the intersection between estate and privacy law as well as the public policy behind the “open court” principle. The personal representatives of the estates of murdered Canadian billionaires, Barry and Honey Sherman, have indicated they intend to appeal a very recent Ontario Court of Appeal decision to overturn a sealing order over Court files relating to the Estates. The issues in this developing case also highlight the opportunities for estate planning strategies when privacy issues are a primary concern.
Barry and Honey Sherman, a prominent Toronto business and philanthropist couple, were found dead in their home on December 15, 2017 under suspicious circumstances. An ongoing police investigation is treating their deaths as a targeted double homicide. The case has garnered much media attention and speculation over the past year and a half.
According to one news article, Barry apparently died with a will dividing his estate equally between his children. Honey’s will could not be located. Their estates are estimated to be worth $5 billion.
If an individual dies with a will and owns significant enough assets or real property, the will is typically submitted to the Court for probate, a summary process to confirm the document’s validity. In the vast majority of cases, applications for a Grant of Probate are submitted by a paper application process that does not involve a Court attendance. The application contains information about the personal representatives of the estate, the beneficiaries as well as an inventory of estate assets.
In June 2018, the personal representatives of the Sherman Estates obtained a rare sealing order from Justice Dunphy of the Ontario Superior Court, removing public access to the Court’s probate file. A Toronto Star reporter appealed the sealing order.
Court of Appeal
The Ontario Court of Appeal released its decision to reverse the sealing order last week. The Court of Appeal confirmed the high threshold for granting a sealing order that displaces the public’s otherwise open access to the Courts. The Court explained that personal concerns alone could not warrant a sealing order. Rather, there must also be an important public interest in need of protection before a court could seal materials which would normally be available to the public. Notwithstanding the prominent identities of the deceased and the sensational story behind their deaths, the Court of Appeal held that the evidence in this case (a single 13-paragraph Affidavit) did not provide the necessary basis for continuing the sealing order. The personal representatives are apparently appealing that decision further.
Estate Planning for Privacy
A proper estate plan is your opportunity to have your individual values and priorities guide the disposition of your assets after death. Estate planning motivations could include minimizing taxes, avoiding disputes, promoting beneficiaries’ self-sustainability and so on. If privacy concerns are high on your list, various estate planning methods are available to minimize the amount of information that may become publicly available:
- Joint assets: jointly-owned assets pass to the surviving owner immediately upon the death of the other owner, and thus do not need to be listed in probate documents (with some exceptions);
- Multiple wills: despite a recent controversy over whether this was still a valid estate planning tool, multiple wills allow a person to allocate their assets between two pools: a “public” pool dealing with assets that must be probated (ie. real estate) and a “private” pool like private company shares or valuable personal property where significant wealth may be located. This was a strategy reportedly used by Barry Sherman; and
- Trusts: a trust allows a person to separate the legal and beneficial ownership of their assets. Trusts created during an individual’s lifetime are not subject to the probate process and are a robust tool for protecting privacy interests. Anthony Bourdain's estate provides another recent example of a properly executed estate plan where privacy may have been a key consideration: despite his international fame and illustrious career, Bourdain’s estate was valued at only $1.2 million at his death. It was reported that much of his actual wealth, estimated at $16 million, was transferred into a trust during his lifetime, thus avoiding public scrutiny.
Generally, the goal of the above estate planning strategies is to remove as many assets from the estate as possible, so that only minimal information is provided through the public probate process.
If you have privacy-related concerns in the context of your estate plan, feel free to contact us for more information.