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WEL Partners provides litigation, mediation and dispute resolution to clients throughout Ontario:
* Albert Oosterhoff, Professor Emeritus Western University, Counsel to WEL consults on matters within his areas of expertise, providing opinions concerning Wills, Estates, Trusts and related Property matters.
Please Enjoy,
Kimberly A. Whaley & Lionel J. Tupman
WEL Partners
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1. TORONTO POLICE SERVICES SEMINAR, FEBRUARY 2, 2017
WEL PARTNERS presented at the Toronto Police Elder Abuse Seminar, coordinated by Detective Stuart Blower, on "Elder Abuse and Capacity, including Predatory Marriages" on February 2, 2017
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2. MONEY AND FAMILY LAW
Kimberly's article: "Capacity to Marry, Co-Habit, Separate and Divorce - Part II" was published in Money and Family Law, December 2016, Issue 31-12
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3. OSGOODE PROFESSIONAL DEVELOPMENT, FEBRUARY 9, 2017
Kimberly Whaley, Lionel Tupman, Birute Lyons and Nancy Patrick presented at the Osgoode Professional Development program along with Susan Stamm from the Office of the Public Guardian and Trustee, on Guide to Passing of Accounts and Fiduciary Accounting.
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4. FAMILY CAREGIVER NEWSMAGAZINE
Kimberly's article: "Power of Attorney - Uses and Abuses" was re-printed in the Family Caregiver News Magazine, of the South East CCAC.
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(i) CAN YOU GIVE A GIFT WHICH YOU DO NOT HAVE?
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by Kimberly Whaley
What happens when someone gives you a monetary gift in the form of a cheque, but then dies before you discover that there are insufficient funds to cover the cheque? Does that person's estate have to honour the cheque? Justice Whitten of the Ontario Superior Court of Justice looked at this issue in the decision of, Teixeira v. Estate of Maria Markgraf specifically asking: "Can you give a gift that which you do not have?"
[1]
FACTS
When Mary was aware that she was ill and facing death she wanted to repay the kindness and courtesies of her long time neighbour. She attempted to do this in two ways. She executed a Will (after being assessed for testamentary capacity) in which she bequeathed $100,000.00 to her neighbour and she executed a cheque (also in the amount of $100,000.00) payable to her neighbour. She asked her stepson (and executor) to give her neighbour the cheque, and he did, days before she passed away.
The reasons for decision are not clear on what happened next, but Justice Whitten states: "Not surprisingly [Mary's bank], given the amount, wanted to investigate. Ultimately, the cheque was returned to [the neighbour] who, within days of Mary's demise presented the cheque at his own bank." Although the cheque was not formally returned NSF, it appeared that Mary's account only had $81,732.75 in funds. Mary had a RIF and a GIC at the same financial institution which could cover the remaining amount owing. The executor initially took the position (relying on Mary's instructions and his belief that there were funds in the account) that the cheque would be honoured. However, after legal advice and the reality that the funds were not in the account, the executor changed his mind.
The neighbour brought an application seeking an order requiring the estate to realize the $100,000.00 cheque (the testamentary gift of $100,000.00 had already been paid to the neighbour).
WAS IT A VALID GIFT?
Three criteria need to be met for a valid inter vivos gift, namely 1) an intention to donate; 2) an acceptance; and 3) a sufficient act of delivery.
There was no doubt that Mary "voluntarily intended to divest" herself of the $100,000.00 that she believed was in her account. It was her idea, and she had the necessary mental capacity to gift.
[2]
The neighbour knew what he had to do with the cheque and took steps to realize the sum (attending the financial institutions to cash the cheque), so "acceptance" was made out as well.
[3]
"Delivery" of the gift was the problem. The Court referred to Professor Ziff's text (Property Law) and noted:
a cheque is neither money nor representation of money, it is only a direction to the drawer's bank which can be countermanded (by the drawer) before it clears. Therefore, a gift by cheque is not complete until it has cleared and the intervening death of the donor could ruin the gift, at that point it can no longer be a simple and
inter vivos transaction.
[4]
Despite Mary's belief to the contrary, she did not have the necessary funds in her account. Yes, there were funds in her RIF and GIC, but Justice Whitten concluded that "the bank cannot "will, nilly" transfer from those products - that would take positive steps and the written direction by Mary". Simply put "she did not have what she sought to give" therefore she could not deliver the gift.
As the gift was not perfected, it was not a valid inter vivos gift. Justice Whitten succinctly concluded: "This Court, like other Courts, does not have the power to be a financial deity who magically transfers funds to make everything good".
ESTOPPEL BY CONVENTION
The decision also briefly touched on "estoppel by convention". In order for estoppel by convention to be applicable three criteria must be met:
- the parties must have a mutual understanding or acceptance of a certain set of facts or law;
- one party must have acted in reliance on this shared assumption (resulting in a change in their legal position); and
- it would be unfair or unjust to have the other party resile from the initial mutual assumption.
In this matter the parties (including Mary) thought Mary had funds to satisfy the gift. However, the neighbour did not take any steps on this mistaken belief that changed his legal position. He was in the same position he was in before he received the cheque: "There's no evidence that [the neighbour] acted to his detriment in anticipation of receiving this $100,000.00 via the cheque. No extravagant purchases, no commitment to others, no investments."[5] The neighbour had "done nothing as a consequence of learning about the cheque, he was still a neighbour but he was a neighbour with an unenforceable cheque".
[6]
Justice Whitten also did not think the situation amounted to "unfairness":
Yes, it's unlucky for [the neighbour] who appeared to be poised for an increase in his net worth by $100,000.00,
but it's not unfair, you cannot give away what you do not have to begin with. Nor can your intended beneficiary receive something out of nothing.
[7][emphasis added]
CONCLUSION
It is both fortunate and unfortunate that the neighbour had not made an extravagant or grand purchase upon being given the cheque. It appears that if he had, perhaps Justice Whitten would have decided differently. Or perhaps not, and he would have been burdened with a purchase he could not afford. We recently wrote about a similar case Mowry v. Groome[8] where an executor attempted to cash a cheque the deceased had given him before he died. While the deceased had enough money in other accounts to cover the cheque, he did not have enough in that particular account. The Court in that case also concluded that the gift was invalid, noting that an incomplete gift was nothing more than an intention to gift and that the money that was said to be the subject of the gift "simply didn't exist". The lesson being, if you intend to make a gift, make sure you have enough money in the same account that the cheque is drawn on, it is not enough to have the funds in other investment products.
[1]
2017 CanLII 2295 (ON SC) at para. 7
[8]
Mowry v. Groome 2016 ONSC 7850 (CanLII)
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(ii) BC COURT OF APPEAL CONFIRMS NO DUTY OWED BY DRAFTING SOLICITOR TO BENEFICIARIES UNDER FORMER WILL
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This case[1] looks at striking pleadings for failure to disclose a reasonable cause of action and severing certain claims from a Will challenge. Specifically, the British Columbia Court of Appeal looked at whether it was "plain and obvious" that there is no duty of care imposed on a drafting solicitor (taking instructions from a testator for a new Will) to protect the interests of beneficiaries under a former Will?
FACTS
In 2007, the deceased and his wife had executed mirror Wills under which they left their entire estate to each other, with a gift over to their son on the death of the survivor ("2007 Will").
After his wife died, in 2012 the surviving spouse, the deceased instructed his lawyer to prepare a new Will, unknown to his son (the 2012 Will). Under the 2012 Will, instead of everything being left outright to the son, $100,000.00 was left to a church and the residue was to be held in a discretionary trust for the son's lifetime. The Public Guardian and Trustee of British Columbia ("PGT") was appointed as the trustee of the trust.
When the PGT brought a probate action to prove the 2012 Will (the PGT was the committee of the estate under the Patients Property Act), the son responded and counterclaimed. His pleading was "32 pages in length and contain[ed] a rambling mixture of allegations of fact, evidence and argument." The PGT brought a motion for orders striking the son's pleading with leave to amend, or alternatively that his response and /or counterclaim be severed and stayed, among other relief.
The judge at first instance, Justice MacKenzie, described the son's response and counterclaim as containing:
vague and repetitive allegations, other parts, particularly of the Response, are replete with evidence and argument, and still others are a flawed mingling of such shortcomings. Overall, [the son']s Response is unduly drawn out and even discursive at times, and both pleadings are laden with extraneous and collateral content. The deficiencies are serious and hinder the Court's ability to accurately discern certain of [the son']s defences and claims.
[2]
Justice MacKenzie also noted that: "it is unduly burdensome for the Court to perform a forensic evaluation of [the son's] pleadings, approving or disapproving of them line-by-line. . . . Nor is it the role of the Court to rewrite [the son's] pleadings for him, and I do not propose to do so." The son's pleadings were "plainly embarrassing and deficient" for many reasons, and with one exception, Justice MacKenzie agreed that the son should be given a reasonable opportunity to amend them. That one exception was the claim based on the allegation that the lawyer owed the son a duty as a beneficiary under the 2007 Will to not carry out the father's subsequent instructions that were inconsistent with the provisions of that Will. Her Honour found that such claims were "doomed to fail" and "hopeless in law".
Justice MacKenzie also ordered that the proof of Will action brought by the PGT be severed and tried separately from the son's counterclaim and that it be limited to the issues of testamentary capacity, undue influence, and due execution. The son's other claims (which were difficult for the Court to discern but appeared to be equitable claims for breach of trust, unjust enrichment, fraudulent conveyance and negligence claims against the PGT and its staff, among others) would be heard after.
APPEAL
The son appealed, arguing that the motion judge erred by striking the claim against the solicitor based on the duty owed to him and erred by severing and staying the remainder of his claims.
The test for striking a pleading on the basis it fails to disclose a reasonable cause of action was described in Hunt v. Carey Canada Inc. [1990] 2 SCR 959. Claims should only be struck out if it is "plain and obvious" that they will fail.
Justice MacKenzie had struck the claim as there was "plainly no reasonable claim on the ground" that an alleged duty was owed by the drafting solicitor to the son as a beneficiary of the father's 2007 Will not to carry out the father's subsequent instructions that were inconsistent with the 2007 Will.
The motion judge relied on Graham v. Bonnycastle 2004 ABCA 270 (leave to appeal to SCC refused) where the Court undertook a comprehensive review of the existing jurisprudence on solicitor negligence. The majority recognized that imposing a duty of care on solicitors in favour of beneficiaries under a former will would create untenable conflicts of interest and make solicitors reluctant to act for elderly testators looking to change their testamentary arrangements. The Court also referred to Korpiel v. Sangunetti [1999] BCJ No. 1048 (SC) where it was also determined that solicitors owe no duty to beneficiaries beyond the competent fulfillment of the testator's testamentary instructions.
The Court of Appeal opined that the motion judge was correct in law when she found the son's claims were bound to fail:
[37] I agree with the reasoning in Graham v. Bonnycastle and I would adopt it: there is no justification for imposing a duty on solicitors taking instructions from a testator for a new will to protect the interests of beneficiaries under a former will. To impose such a duty would put the solicitor in an obvious and untenable conflict of interest; the result would be unsustainable and unsupportable at law. As a duty of care is a crucial element of a negligence claim, it was "plain and obvious" [the son's] claims in negligence, based on the duty described, were bound to fail. The judge was correct in concluding that his claim was hopeless in law.
[38] Similarly, a claim for breach of fiduciary duty has no prospect of success in the absence of a recognized fiduciary duty. I agree with Taylor J.'s conclusion in Korpiel that it is only in discharging a solicitor's duty to his client that it can be said that a parallel duty is owed to those persons the client wishes to benefit. In other words, any duty owed by a solicitor to a beneficiary in a will must mirror the duty owed to the testator: the duty to competently fulfill the testator's instructions. Thus, a solicitor cannot owe an independent fiduciary duty to the beneficiary of a will, for, if the testator's instructions were to conflict with the beneficiary's interests, the solicitor would be unable to avoid conflicting duties to both parties.[emphasis added]
The Court of Appeal also agreed with the motion judge's decision to sever and stay parts of the son's claim. To prove a Will, the propounder must prove, in addition to testamentary capacity that the Will was properly executed and the testator knew and approved the contents of the Will. These are focused issues and the other issues raised by the son were complex and far-reaching. The Court of Appeal found that the motion judge's decision was grounded in clear reasoning.
CONCLUSION
This case further confirms that a drafting solicitor of a new Will owes no duty of care to a beneficiary under a former Will. This of course must be distinguished from cases brought by beneficiaries under a current Will of a deceased testator where the drafting solicitor has been negligent. A solicitor has a duty to competently fulfill the testator's instructions. If the lawyer is careless in the drafting or execution of a Will, the beneficiaries could suffer a loss and could have grounds for a claim against the drafting solicitor.
N.B. For more information on solicitor negligence in the estates context, see my journal article in the Advocates Quarterly, "Solicitor's Negligence: Estates and Trust", [2016] 45 Adv. Q. 102.
[2]
2016 BCSC 1388 at para. 17. The son was represented at the hearing by a lawyer. It is unknown if the lawyer or the son drafted the pleadings.
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(iii) CHANGES TO THE SUCCESSION LAW REFORM ACT UNDER BILL 28
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by Krystyne Rusek
In October of last year, we wrote about the proposed changes to Ontario legislation governing parentage, which were introduced by
"Bill 28, All Families Are Equal Act (Parentage and Related Registrations Statute Law Amendment), 2016" ("Bill 28")
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[1]
Following Committee consideration and amendment in October and November, Bill 28 passed third reading in the legislature on November 29th, 2016. On December 5th, 2016, Bill 28 received Royal Assent. Amendments to various Acts, pursuant to the Bill, were declared in force on January 1st, 2017. A brief examination of the amendments to the Succession Law Reform Act is provided by this piece.
BACKGROUND
The issue of succession rights of posthumously conceived children has become a prominent legal issue in recent years in Canada, fueled by the decisions of individuals to have children later in life and the decreasing cost of fertility treatments.
In 2004, the federal government enacted the Assisted Human Reproduction Act (the "AHRA")[2], which governs assisted human reproduction and reproductive technology. Section 8 of the AHRA requires that written consent be given by the donor to the use of his or her human reproductive material, whether it is obtained before or after death from the donor.
[3]
However, laws of parentage and succession fall within provincial jurisdiction and are determined in accordance with the laws of the province in which the child is born. It is therefore incumbent on each province to enact legislation that addresses the succession rights of children conceived posthumously, but which also accords with the requirements of the AHRA.
British Columbia was the first province to enact legislation to address the succession rights of posthumously conceived children. In 2010, British Columbia amended the Wills, Estates and Succession Act ("WESA") to permit posthumously conceived children to inherit from a deceased parent, provided certain conditions are met.[4] The inheritance rights under WESA are limited to claims against the parent and any right to inherit from a relative of the deceased person begins on the date the descendant is born. This means that the estate of a grandparent or other relative may be fully distributed between the time of conception and the date of birth of the child, without the child having legal entitlement or a claim against that estate.
Ontario has now taken steps to address the issue through similar changes to the Succession Law Reform Act, (the "SLRA")
[5]
,
through the enactment of Bill 28.
AMENDMENTS TO THE SLRA
Bill 28 amends the definition of "child" in the SLRA to include a child conceived and born alive after the parent's death, provided certain conditions are met.
Section 1.1(1) sets out the following conditions with respect to posthumously conceived children:
- The person who, at the time of the death of the deceased person, was his or her spouse, must give written notice to the Estate Registrar for Ontario that the person may use reproductive material or an embryo to attempt to conceive, through assisted reproduction and with or without a surrogate, a child in relation to which the deceased person intended to be a parent.
- The notice under paragraph 1 must be in the form provided by the Ministry of the Attorney General and given no later than six months after the deceased person's death.
- The posthumously-conceived child must be born no later than the third anniversary of the deceased person's death, or such later time as may be specified by the Superior Court of Justice under subsection (3).
- A court has made a declaration under section 12 of the Children's Law Reform Act establishing the deceased person's parentage of the posthumously-conceived child.
Paragraph 1 of section 1.1(1) requires that in order for a succession or dependant claim to arise, notice must be provided of an intention to conceive a child posthumously, using the deceased's reproductive material.
At this time, the Ministry of the Attorney General has not made public a copy of the form that will be required under paragraph 2 of section 1.1(1).
Under paragraph 3, the posthumously conceived child must be born within three (3) years of the deceased parent's death. However, the time-limit set out in paragraph 3 may be extended by the Court, on motion or application of the surviving spouse, if deemed appropriate in the circumstances.
Lastly, in order for a posthumously conceived child to be entitled to succession rights, a
declaration of parentage
must be obtained under section 12 of the
Children's Law Reform Act[6] (the "CLRA"). This section states
:
12. (1) A person who, at the time of a deceased person's death, was his or her spouse, may apply to the court for a declaration that the deceased person is a parent of a child conceived after his or her death through assisted reproduction. 2016, c. 23, s. 1 (1).
...
Declaration
(3) The court may grant the declaration if the following conditions are met:
1. The deceased person consented in writing to be, together with the applicant, the parents of a child conceived posthumously through assisted reproduction, and did not withdraw the consent before his or her death.
2. If the child was born to a surrogate, the applicant is a parent of the child under section 10, and there is no other parent of the child. 2016, c. 23, s. 1 (1).
It is important to note that in order to obtain a declaration of parentage of a posthumously conceived child, the deceased parent must have provided written consent to the posthumous conception. In order to be valid, the written consent must not have been withdrawn. While the original consent must be in writing, there is no similar requirement for the withdrawal of consent.
It is also important to note that the consent must be specific to conception with the applicant. A general consent to allow the reproductive material to be used by an unidentified individual will not suffice.
The declaration may be obtained by application of "any person having an interest".[7] The Court has the ability to find, on a balance of probabilities, that the person is or is not a parent of the child, and may make a declaration to that effect.
[8]
Should all of the above conditions be met, a posthumously conceived child will be considered "issue" under the intestacy provisions of the SLRA.
ISSUES THAT MAY ARISE
1.
Notice of intention to use reproductive material to conceive
Contrary to the BC legislation, in Ontario, the notice of intention to use reproductive material of a deceased person must be provided to the Estate Registrar, yet not to an appointed representative and to beneficiaries. As a result, a search will need to be done with the Estate Registrar of Ontario by any interested party, and arguably, the appointed estate trustee. It is not clear whether the Estate Registrar will have an obligation to provide notice to an applicant for a certificate of appointment, once said application has been filed. Will liability arise to an estate trustee who does not make this inquiry of the Estate Registrar?
It is unknown whether failure to provide the required notice will result in loss of succession rights, without recourse.
Furthermore, in a situation where the deceased's assets pass outside of the estate, for example by right of survivorship or beneficiary designation, there is potential that a declaration of parentage will have been obtained without notice to interested parties. What recourse will be available to interested parties to challenge said declaration after it has been made?
2.
Time-limit for birth
As stated a child must be born within three (3) years of the date of death of the deceased. This limitation is intended to address concerns regarding the timely and certain disposition of estates. This time-limit may, however, be extended by the Court if deemed appropriate. As a result, there may be uncertainty as to how long an estate trustee must wait to distribute the estate in certain situations. Consider an individual who has provided the intended notice, and has the required consent, but encounters difficulties in conceiving. Any Court-approved extensions would be based on the facts of each situation and outcomes would be difficult to anticipate. The uncertainty that results from a delayed declaration of parentage could impact on how and when an estate trustee can administer an estate.
3. Form of consent for the use of reproductive material and withdrawal of consent
The form of written consent required under
section 12 of the
CLRA is not specified. Obvious issues arise as to formality and due execution: Will the consent need to be signed? Does it need to be witnessed? Evidentiary issues of intention and capacity will arise. With respect to judicial interpretation, will the consent be treated as a contract, a licence, or a gift?
As stated above, one of the requirements of section 12 of the CLRA is that the written consent must not have been withdrawn. Withdrawal does not need to be in writing. As a result, the question arises as to whether verbal withdrawal of consent, or withdrawal by action will be sufficient. This too will be an evidentiary matter to be determined by a trier of fact.
PRELIMINARY CONCLUSIONS
The issue of succession rights for posthumously conceived children is complex and requires a comprehensive consideration of all numerous factors and interests. In its amendments to the SLRA, the legislature has attempted to protect the rights of posthumously conceived children, while balancing those rights against public policy concerns. We will wait and see what, if any, unique situations arise in the future as a result of the changes.
[2] 2004, S.C. 2004, c.2.
Use of reproductive material without consent
8 (1) No person shall make use of human reproductive material for the purpose of creating an embryo unless the donor of the material has given written consent, in accordance with the regulations, to its use for that purpose.
Posthumous use without consent
(2) No person shall remove human reproductive material from a donor's body after the donor's death for the purpose of creating an embryo unless the donor of the material has given written consent, in accordance with the regulations, to its removal for that purpose.
Posthumous births if conception after death
8.1 (1) A descendant of a deceased person, conceived and born after the person's death, inherits as if the descendant had been born in the lifetime of the deceased person and had survived the deceased person if all of the following conditions apply:
(a) a person who was married to, or in a marriage-like relationship with, the deceased person when that person died gives written notice, within 180 days from the issue of a representation grant, to the deceased person's personal representative, beneficiaries and intestate successors that the person may use the human reproductive material of the deceased person to conceive a child through assisted reproduction;
(b) the descendant is born within 2 years after the deceased person's death and lives for at least 5 days;
(c) the deceased person is the descendant's parent under Part 3 of the Family Law Act.
(2) The right of a descendant described in subsection (1) to inherit from the relatives of a deceased person begins on the date the descendant is born.
(3) Despite subsection (1) (b), a court may extend the time set out in that subsection if the court is satisfied that the order would be appropriate on consideration of all relevant circumstances.
[5]
R.S.O. 1990, c. S.26.
[6]
R.S.O. 1990, c. C.12.
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PART III: UPCOMING EVENTS
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Legal Education Society of Alberta (LESA), Edmonton
Undue Influence
March 1, 2017
Speaker: Kimberly Whaley
OBA Elder Law
Exploitation and Abuse of Seniors in Financial Banking and Real Estate Matters
March 7, 2017
Speakers: Kimberly Whaley and Lionel Tupman
Legal Society of Alberta (LESA), Calgary
Undue Influence
March 8, 2017
Speaker: Kimberly Whaley
STEP Toronto
April 12, 2017
Estate Planning for Global Families
Speakers: Jeff Halpern, Michael Cadesky and Margaret O'Sullivan
Osgoode Certificate in Elder Law
April 20, 2017
Parent/Adult Child & Sibling Struggles
Speakers: Kimberly Whaley & Albert Oosterhoff
Estate Planning and Litigation Forum, Langdon Hall
April 23-25, 2017
Pecore - 10 years later
Speaker: Kimberly Whaley
www.eplforum.ca
LSUC Six Minute Estate Lawyer 2017
May 8, 2017
Powers of Attorney Litigation
Speaker: Kimberly Whaley
STEP Toronto
May 17, 2017
Challenges of Probate Planning
Speaker: Gillian Musk
B'Nai Brith Seminar
Power of Attorney and Accounting
May 23, 2017
Speaker: Kimberly Whaley
STEP 19th National Conference
A Case for the Standardized Assessment of Capacity
June 13, 2017
Speaker: Kimberly Whaley
Toronto Police Seminar
Elder Abuse
June 22, 2017
Speaker: Kimberly Whaley, Lionel Tupman
CBA Wills Estate and Trust PEI
Capacity and Undue Influence/Attacking and Defending Gifts
June 23, 2017
Speaker: Kimberly Whaley
LSUC, Estates Administration
September 29, 2017
Chair: Kimberly Whaley
Toronto Police Seminar
Elder Abuse
October 5, 2017
Speaker: Kimberly Whaley, Lionel Tupman
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PART IV: RECENT BLOG POSTS
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