Sherman’s will gave wife control of ‘net income’ from estate
Slain billionaire stopped short of giving Honey full control of business empire after his death, according to sources
Barry Sherman’s will decreed that if he died, all “net income” from his multibillion-dollar estate would go to wife Honey for her “comfort and maintenance” and “anything else my wife directs,” according to new information the Star has obtained in its ongoing investigation of the 2017 double murder of the high-powered philanthropists.
Honey would not control “capital” decisions, such as whether to invest in or sell shares or a major asset. Still, all the net income after expenses from the operation of businesses like the generic drug giant Apotex or her husband’s many real estate holdings would be hers to do with as she pleased.
With both Shermans dead, the estate — net income and capital — passed directly to the four Sherman children, son Jonathon and his sisters Lauren, Alexandra and Kaelen, to be split equally, according to family sources. As the Star will reveal in coming days, there are ongoing disputes over control and succession of the Sherman empire.
The Star has also learned that nine months before the murders, Barry added a codicil to his will, reducing from eight to four the number of trustees who would preside over his estate.
The three Sherman daughters lost their spots as trustees, but son Jonathon kept his. (The relatively new term “estate trustee,” used interchangeably with “executor,” conveys a key legal concept: estate trustees receive the estate of the deceased in trust and have a fiduciary duty to administer it properly, and without conflict of interest, on behalf of the beneficiaries.)
Why is all of this important? The Toronto police have said in open court during the Star’s ongoing attempts to unseal search warrant documents that the estate of Barry Sherman is “embedded” in their homicide investigation. It is important, but police will not say why.
While it is not unusual for one spouse to leave assets or income from a business to the other, confidants of the Shermans previously said they thought Barry’s will was not overly generous to Honey.
The original copies of Barry’s will, related estate documents, and an affidavit filed on behalf of the family remain sealed by a court order the Star is challenging. The Supreme Court of Canada is considering arguments from both the Star and the Sherman estate trustees, and numerous intervenors, and will likely make a ruling later this year. The Sherman trustees argued that the Sherman family has a “reasonable expectation of privacy” and that there was a safety risk if the information came out. The Star, represented by lawyer Iris Fischer, asked the court to “affirm afresh” Canada’s long-standing open courts principle.
Independent of these sealed documents, using sources that include Sherman family members and close associates of the Shermans, the Star has pieced together a timeline related to Barry Sherman’s last will and testament and some of the instructions he left behind.
Sources in this story have direct knowledge of the estate documents and have been granted anonymity because they do not have permission from the estate to discuss the matter.
The bodies of Barry, 75, and Honey Sherman, 70, were discovered just before noon on Friday, Dec. 15, 2017. They were found posed in a seated position, slightly reclined backwards at the waist, each with a belt around the neck, looped to a low railing on one side of their basement swimming pool in their home on Old Colony Road in North York. Homicide detectives say the cause of death was “ligature neck compression.”
The Shermans were killed the previous Wednesday, between 9 p.m. and midnight. The investigation into their deaths is now in its fourth year. Initially, police pursued the theory it was a double suicide or a murdersuicide, according to search warrant documents unsealed following a separate Toronto Star challenge. Six weeks in, police changed their minds, calling it a double homicide after detectives interviewed a top forensic pathologist who did a second series of autopsies arranged by the family. Now, police say they have a “theory” of the case and “an idea of what happened” and are still pursuing leads. Only one new person has been interviewed in the last year; the focus is more on analyzing electronic information, including banking, video, GPS locational and cellphone records.
Somehow, Barry Sherman’s estate is part of the case.
Barry was a study in contrasts: a billionaire who drove rusty old convertibles; a man who told his patent lawyer Harry Radomski to consolidate his billings to save postage, yet gambled (and sometimes lost) millions of dollars on lost causes because he believed he was right.
He was long troubled by two competing thoughts. First, men on the paternal and maternal sides of his family, including his father, had died at a young age, which led him to espouse a fatalistic belief he, too, would die young. Yet he would also tell his good friends, like Jack Kay, his right-hand man for 35 years, that he would live to 120 (the age of Moses, he would say, though he was not religious). “How can the world get along without me?” Barry said to friends.
He had been building Apotex since the early 1970s. The financial press has said Barry was worth $4.7 billion, but insiders at his family company said with his other holdings he was likely worth $10 billion. Someone like that, who often mused that he would die young, could be expected to have sophisticated estate planning. Instead, his will was a simple document, the boilerplate type you would get from a business supply company, according to sources.
The first Sherman will the Star is aware of (the Star does not know if there were earlier versions) was created and signed in 2013. Barry was 70 that year. The will provided instructions and also listed eight trustees to oversee his estate after death. The trustees were Jack Kay, Craig Baxter (then president of Sherfam, the Sherman family holding company), Mike Florence (husband of Barry’s sister Sandra), Allen Shechtman (husband of Honey’s sister Mary), and Barry and Honey’s grown children, Lauren, Jonathon, Alexandra and Kaelen.
As to instructions, the will stated that should Barry die and Honey survive for 30 days after his death, Honey would have full access to the net income of the estate.
“All net income (of Barry’s estate) goes to my wife for comfortable maintenance of my wife and anything else my wife may direct,” the 2013 will stated, according to sources with knowledge of the document.
While Barry’s wishes were for Honey to have the net income, he stopped short of giving her access to his entire empire without the approval of a majority of his then eight trustees.
For decisions on capital, such as buying or selling shares, or decisions regarding assets like Apotex or one of his many real estate holdings, it was the trustees who had “absolute and unfettered discretion,” according to sources.
There was also a proviso in the will that stated the trustees could, if they wished, give money (however much they determined) to a short list of descendants — the children and grandchildren of Honey’s sister Mary and Barry’s sister Sandra.
That’s how the will stayed until March 29, 2017. A codicil was added that day, making changes to the trustees. The will itself remained the same.
Craig Baxter, who had run the Sherman family holding company (Sherfam) for Barry, had left Sherfam, but was still an estate trustee. Baxter had been replaced at Sherfam by Alex Glasenberg, who had worked for 31 years at Apotex and Sherfam. Glasenberg was now Sherfam president and it made sense he should replace Baxter on the will.
At the same time, Barry decided that two of his estate trustees — Mike Florence and Allen Shechtman, who were in their late 70s — were too old to preside over his estate, according to sources. They were of similar age to Barry and the general convention of estate planning holds that your trustees should be younger than you are. In the March 29, 2017, codicil to his 2013 will, Florence, Shechtman and Baxter were removed. Baxter was replaced with Glasenberg. Despite the concern over the age of some of his trustees, his close friend and business associate Kay, two years older than Barry, remained as a trustee.
The other change Barry made — the Star does not know why — was the removal of his three daughters as trustees. He kept Jonathon as a trustee and added daughter Alexandra’s husband, Brad Krawczyk, who worked at Sherfam for Glasenberg.
One source close to the Sherman family said Jonathon wanted his business partner Adam Paulin to be an estate trustee. “No way,” Barry said, according to the source. As the Star has reported, there was ongoing tension between Barry and Jonathon over Jonathon’s insistence that Paulin (he and Jonathon have several businesses, including a self-storage company called Green Storage) attend family business meetings with Jonathon. Barry resisted this, though he, Jonathon and Paulin had occasional lunches to discuss Green Storage. Jonathon has told me in an interview he likes having Paulin, who has two business degrees, with him at meetings because of a “lack of confidence” in his own acumen.
Back in 2015, Jonathon wrote to his father suggesting both he and Paulin be part of a “succession” plan for Barry’s business empire (succession in this instance refers to who will take over a business when the founder retires or dies). While Barry called Jonathon his “heir apparent” in an email two months before the murders, sources say Barry did not want his son’s friend to be part of the legacy he would one day leave for his four children.
The new trustees were set as of March 29, 2017 — Jack Kay, Alex Glasenberg, Jonathon Sherman and Brad Krawczyk. Nothing else changed in the will. The stipulation that Honey would be given full access to Sherfam “net income” if Barry died remained the same.
Sources who include Sherman friends and family say that had Honey survived Barry, she would have continued on with what for her was an unusually high spending plan, and she would not have been inclined to be as generous as Barry typically was with their children.
Honey, like Barry, had long been a penny pincher. But that had changed in recent years. With Barry’s grudging support, she was preparing to build a mansion in Forest Hill at a cost of $30 million. Family and friend sources of Honey say it had bothered her over the years that Barry had gifted hundreds of millions of dollars to their children and others, yet she did not have money that, as one friend put it, “she could call her own.” As the Star has previously reported, Honey had told friends in late 2017 that Barry was planning to give her between $100 million and $500 million. This would be “her own money” and it was understood among Honey’s friends that she would give some of this money to her sister Mary Shechtman.
Meanwhile, Barry was at the time seeking to grow Apotex and wanted to pour tens of millions of dollars into a new Florida drug production plant he had just purchased. All this at a time when Barry and Apotex were faced with having to pay $580 million as a settlement from a patent case he lost in the latter part of 2017.
While Barry’s wishes were for Honey to have the net income, he stopped short of giving her access to his entire empire without the approval of a majority of his then eight trustees
The changes to Barry’s will in March 2017 were made by the law firm of Davies Ward Phillips & Vineberg LLP, which had dealt with his earlier will. Davies is a Bay Street powerhouse firm. Its website says the firm deals with “high-stakes matters” and its lawyers have the ability to take on difficult situations with “unparalleled clarity, speed and intelligence.”
Two witnesses are required for the signing of a will in Ontario, and when the codicil was added it was witnessed and signed that day (March 29, 2017) by Barry’s longtime executive assistant Joanne Mauro and another administrative employee of Apotex, according to sources.
A Sherman family member has raised with the Davies law firm a concern over the timing of a legal document related to the 2017 codicil. Sources say the family member was concerned that it was not signed until after Barry and Honey were dead. The document is called an “affidavit of execution” and it is a notarized document used in large estates to provide proof that the witnesses to the will actually did witness it. According to the Sherman family member, this document was not signed by the two witnesses and notarized until after the Shermans were dead. “Apparently there was a bit of a panic and the lawyers rushed up to get the affidavits of execution signed so there would not be a problem with the will,” the Sherman family member said.
The Star asked Kent Thomson, head of litigation for the Davies firm, about this issue. Thomson said he could not comment specifically because the estate remains under seal. Generally, though, he said he could provide this comment:
“Affidavits of Execution are sworn by people who witness the execution by a testator of Wills, Codicils and other similar estate instruments. They simply confirm that the person in question observed the testator sign a particular document,” Thomson told the Star. “Affidavits of Execution do not form part of a Will or Codicil, and do not modify the contents of the estate instruments that they relate to. There is no requirement for Affidavits of Execution to be sworn on the same day that a Will, Codicil or other estate instrument is executed. Nor is it common practice to do so.”
The same family member has also raised with Davies a concern about the legitimacy of Barry’s signature on the 2017 codicil. Thomson said that allegation came from “one person associated with the Sherman estates” and it has been thoroughly investigated and dismissed as “baseless.” He said “Dr. Sherman confirmed his intention to execute these documents with his children, as well as with other close business associates, several days before he did so, including in writing.” Thomson said immediately after Barry Sherman signed the 2017 documents he “confirmed to a number of people that he had done so — again, in writing.”
When Barry and Honey were found dead in their home, the Davies lawyers moved forward with probating Barry’s will, applying for and receiving a sealing order from Justice Sean Dunphy of the Ontario Superior Court, six months after the murders. No will of Honey’s was ever discovered, although a confidant of hers recalls Honey saying not long before she was killed that she had just “updated” her will at a lawyer’s office.
There would be one final change to the trustees overseeing Barry’s estate. One year and a day after the murders, Jonathon Sherman and then Apotex president Jeff Watson walked into Jack Kay’s office at Apotex and fired him. He was escorted out the door.
At the time, Kay was one of four estate trustees, along with Jonathon, Alex Glasenberg and Brad Krawczyk. Kay was not invited to any trustee meetings after the firing on Dec. 14, 2018. According to sources, Kay is no longer a trustee on the Sherman estate.
The three trustees are now Jonathon, Glasenberg and Krawczyk, who are also the three directors of Sherfam, the family holding company. Jonathon has told the Star that Glasenberg and Krawczyk are allied against him, along with his sisters.
“I have not physically seen Al- ex Glasenberg since March,” Jonathon said in a late December interview. “He has been refusing to hold meetings because I ask difficult questions.”
Glasenberg told the Star he has been “carrying out my duties in the best interests of the corporations, estate, and all of the Sherman family, including Jonathon Sherman.” He said he is “confident that Jonathon Sherman’s sisters have supported my work and the work of all the companies’ advisers and management to run the companies profitably and maximize their value.”
Part 2, Thursday: The Bank of Barry
Part 3, Saturday: Sherman Succession — The Battle Begins
Kevin Donovan can be reached at kdonovan@thestar.ca or 416-312-3503. Follow him on twitter @_kevindonovan