Epstein case would play out differently in Canada: Urback
By Paul Russell, AdvocateDaily.com Contributor
The controversy surrounding the death of financier Jeffrey Epstein shows that no matter how rich or famous you are, issues around estate planning can come up after you die, says Toronto wills and estates lawyer Matthew Urback.
“Having hundreds of millions of dollars does not necessarily insulate anyone from the legal challenges in an estate after a person dies,” says Urback, a partner with Shibley Righton LLP.
According to a CNBC story, a bitter legal battle is expected following the 66-year-old’s suicide in a Manhattan jail cell, where he was being held pending trial on charges of sex trafficking with minors. His last will was drawn up just two days before his death, the story states, with his estate valued at more than US$577 million, as well as the fine arts, antiques and collectibles that have yet to be evaluated.
It is expected that the women who accused him of sex offences will file claims against his estate, tying it up in litigation for an unknown period of time, CNBC reports.
While Ontario’s laws in this area are different from those in the United States, Urback says the tussle over Epstein’s fortune provides three valuable lessons for people on this side of the border.
Your debts don’t die with you
“Epstein left quite a sizeable estate, and many lawsuits are almost certainly coming against it, so I think people might wonder if the same situation arose here in Canada, would the debts be passed onto the beneficiaries,” Urback tells AvocateDaily.com.
“The answer is no because any money awarded from the lawsuits is taken from the estate first, with no liability passed onto heirs,” he says.
In Ontario, if someone has launched a lawsuit against an individual and that person dies, a court order has to be granted for the action to continue, with the estate trustee or executor standing in place of the deceased person in defending the lawsuit, says Urback.
“If Epstein were an Ontario resident, just because he’s dead wouldn’t mean that he would escape from his debts,” he says.
We don’t have an estate tax
Since one of Epstein’s five homes is located in New York City, the story notes that New York State will probably apply to have its estate tax — which tops out at 16 per cent — levied against him.
“By contrast, Canada is a very favourable jurisdiction for hoarding assets and wealth and transferring it onto future generations,” says Urback.
The only thing Canadians pay upon death is a probate fee of approximately 1.5 per cent of the estate, he says, explaining that it’s meant as more of an administrative surcharge.
“Who knows, one day our government may bring in an estate tax, following the example of other countries, including the United States,” Urback says.
Deathbed wills are valid but troublesome
The story states that Epstein’s last will was drawn up two days before his suicide.
“There’s nothing wrong with that, as people make wills all the time on their deathbed, but that can lead to potential challenges,” says Urback.
“Doing a will right before your death isn’t inherently problematic, but the circumstances surrounding it leads to some vulnerabilities,” he says.
Those challenging the will of people who are unhealthy and nearing the end of their lives could argue they are not competent or susceptible to undue influence, even though there have been cases in Ontario where people suffering from illnesses have been deemed to have the capacity to change their wills, Urback says.
“If someone is in hospital and being medicated, those drugs can impact their thinking and mental state, leaving open an avenue for people challenging the will,” he says.
“Many issues evident in the Epstein case really transcend economic status,” Urback says.