Common disaster planning and the Estates of Barry and Honey Sherman

There are many unanswered questions arising from the mysterious double homicide of Canadian billionaires Barry and Honey Sherman, who were found dead in their home in North York on December 15, 2017 amid evidence of foul play. No definitive explanation has ever been given by the police as to who killed the Shermans, or why. In fact, to this day no charges have been laid in connection with their deaths despite a high-profile police investigation, parallel probe financed by the Sherman family, and a $10 million reward offered in exchange for any information leading to the arrest of a suspect.

Despite significant interest, there is also very little publicly available information regarding the manner in which the Shermans’ estates will be distributed. This is because the trustees of the estate took the unusual step of obtaining a sealing order over the court files containing the Shermans’ wills, and the Superior Court was satisfied that the family’s privacy should be protected and that there was a reasonable apprehension of risk of physical harm to the beneficiaries of the estate given the violence of the crime and the unknown motives of the perpetrators. After the Toronto Star newspaper sought access to the court files, the issue of whether the sealing order should be maintained wound its way all the way to the Supreme Court of Canada, which heard the case in October of 2020.¹ The court has not yet released its decision, and in the meantime, there has been no public access to the Shermans’ wills or estate planning documents.

While the Shermans’ estate planning remains largely a mystery at this point, the unknown circumstances of their deaths give rise to a further legal issue which may or may not be consequential depending on the manner in which their will(s) were drafted. Where two or more people die at the same time or in circumstances where it is uncertain which of them survived the other, there are certain complications that may arise in the administration of their estates. This issue is discussed in more detail in this blog.

Simultaneous Deaths and Estate Planning

In Ontario, where two or more persons die at the same time or in circumstances where it is uncertain which of them survived the other(s), the property of each person is to be disposed of as if he or she had survived the other.² This means that each person’s estate is administered on the basis that their spouse predeceased them, which can have various unwanted consequences.

One example is that in the absence of a clause that would contemplate a scenario where both spouses die simultaneously, often referred to as a “common disaster clause”, spouses with mirror wills may have certain bequests triggered twice. For example, if each spouse’s will stipulated that the residue of their estate was to be transferred to their spouse if he/she survives the other by 30 days, with a gift over of a specific bequest to their first child and the residue to their second child, if the parents died simultaneously the first child would get the specific bequest twice and the second child would be shortchanged.

Another problem may arise where spouses name each other as executors of their respective estates without naming an alternate. If they were to die simultaneously the determination of who would become the estate trustee would be made by the court in accordance with the laws of intestacy rather than the wishes of the deceased.³

Simultaneous Deaths and the Shermans’ Estates

In the case of the Shermans, the unknown circumstances of their deaths may lead to uncertainty with respect to how their estates, totalling a combined $5-10 billion, are to be administered. It has been reported, although as yet unconfirmed due to the court’s sealing order, that Barry had primary and secondary wills, while Honey died without a will. Apparently, Barry’s wills may have left the residue of his estate to Honey in the event he predeceased her.⁴ If this is true, and Barry is found to have died before Honey, complications could arise if the residue of his estate were to pass to Honey’s estate to then be distributed to her heirs pursuant to the laws of intestate succession.⁵ This would have the unintended effect of distributing some or all of his estate assets according to a statutory scheme rather than in accordance with his wishes.

Takeaways

While it is a scenario that most of us would rather not think about, it is valuable for estate planners and their clients to turn their minds to, and plan for, common disasters to prevent the unintended consequences that can occur where such a contingency (however unlikely) is not provided for in a person’s will. In so doing, added complexities, costs, and potential disputes can be avoided for the families of victims of such tragic events.