En francais
By Amy Jo Ehman
Canadian Bar Association
National Magazine
August/September 2004 Issue
A rapidly aging generation is now getting ready to transfer billions of dollars to its children and heirs — and wealth management lawyers are there to lend a hand.
"I hope you rot in hell!" Not a promising way for a case to begin, but Remi St. Pierre of McCuaig Desrochers in Edmonton has heard it all during his long career in estate law.
Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, "Together, two or more professionals can bring the client a lot more value than one plus one. We sit as part of a unified team, one that may also include a lawyer, an accountant, a banker, an actuary.”
His client had just died, leaving a $3-million farm estate to his three adult daughters, and they weren’t getting along. "Just as I stepped into the boardroom, one daughter turns to the other and says, ‘I hope you rot in hell.’ And things deteriorated from there," recalls St. Pierre, Past Chair of the Wills, Estates and Trusts Section of the CBA-Alberta.
Before the dispute could land in court, however, he asked the three women to consider what their father would have done had he known they would fight over his money. "All three of them agreed he would have put the money on the table and lit a match to it," St. Pierre recalls.
"So I said, ‘Out of respect for your father, why don’t we see if we can put our differences aside and deal with this?’" To his relief, it worked. After years of helping this client to maximize his assets, he did not want to see the estate dwindled by a costly court fight.
A new field
St. Pierre is one of a growing number of lawyers practising in the field of wealth management, an emerging specialty of law that exceeds the narrow boundaries of traditional wills and estates. Wealth management brings together elements of tax law, elder law, estate law, financial planning and, in many cases, a good dose of human psychology.
"Over the years, lawyers have been approaching the will like it’s a ‘loss leader,’ something at the end of the supermarket counter," St. Pierre says. "They hope to attract a client by suggesting a will for $75, with the hope they can make money on the estate when the person dies."
At his firm, however, the will isn’t a means to an end, but a vibrant end in itself. "We’re using the will not as a plan for death and not as a loss leader, but with the view of it being an ongoing plan for life."
Wealth management is a "holistic" approach to estate planning that requires an ongoing relationship with the client, with frequent reassessment of changing assets, family relationships, personal philosophies and evolving tax and probate laws. It anticipates problems that may lead to litigation, and strives to reduce or defer taxes in order to preserve as much as possible for the next generation.
"The law quite clearly states that no one is obliged to organize his affairs to pay the maximum tax," says St. Pierre. "As long as you’re within the law, you’re entirely able to pay the minimum tax. And that’s exactly what we’re aiming at.
"I tell clients, ‘Sure, you can have a dime-store-variety will. But by saving a couple hundred dollars by [using] a will kit, you’re losing thousands of dollars by not making the right tax decisions.’"
There’s a lot at stake. Financial analysts estimate that as much as $11 trillion will change hands in North America in the next two decades — $1 trillion alone within Canada — as one generation leaves its wealth to the next. That next generation, the Baby Boomers, may have a different view of the family wealth than their aging parents, many of whom struggled through difficult times and developed an attitude of proud self-sufficiency.
"We’ve taken such good care of this next generation that they don’t have this attitude," St Pierre observes. "They have the attitude that they will be provided for — Mom and Dad were there for me, and now the nest egg is there. Their sense of duty to [their children] is not as onerous as their parents felt," says St. Pierre.
"I hope the bounty of one generation will find its way to the next, but without some assistance, I can see some difficult times ahead."
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