| (Continued from page 1) Planning ahead
Hugo Patenaude faces this dilemma in his practice at Fasken Martineau in Montreal. Many of his clients are among the wealthiest people in the country, many of whom built their own businesses and assets from scratch. Patenaude develops strategies to preserve and protect his clients’ wealth and to bring about successful business succession and wealth transfers to the next generation.
A big part of his job, he says, is to help prepare that generation to properly manage and handle the wealth that’s coming to them. Among the vehicles that can be created for that transition are trusts, corporations or investment committees. The idea is to make the transfer gradual, introducing the heirs slowly to the best practices of wealth management.
Patenaude, who also has a Master’s degree in taxation and worked as a tax specialist for seven years, notes that his wealth management clients need services from a wide range of professionals in multiple jurisdictions. Accordingly, lawyers who practise in this area need to form networks of relationships to help provide their clients with the best solutions.
Often, those teams include a number of experts in other fields. "Together, two or more professionals can bring the client a lot more value than one plus one," says Adrian Mastracci, investment counselor and president of KCM Wealth Management in Vancouver.
In this cross-disciplinary practice, says Mastracci, "we sit as part of a unified team, one that may also include a lawyer, an accountant, a banker, an actuary. I may be the quarterback because the client came to me first, or the lawyer may be the quarterback because it was his client. But somebody gets to know the whole story."
Unlike lawyers, who don’t give investment advice, Mastracci helps his clients build their wealth in a variety of ways. But similar to lawyers, he is concerned about protecting those assets from taxes and litigation after death. For that reason, he advises his clients to forgo the simple one-page will and to seek the ongoing advice of a lawyer specializing in this area.
"Wealth management doesn’t just mean investing," he says. "Professionals — especially lawyers — are recognizing this is a field where there’s great potential."
Family involvement
In many situations, Mastracci advises his clients to include their heirs in key decisions. Many lawyers, too, are encouraging their clients to overcome the age-old reluctance to discuss their succession plans with their heirs.
"There seems to be more of an openness and a willingness to involve family members in the process," says estates lawyer Hilary Laidlaw of McCarthy Tétrault in Toronto. "There are a number of reasons for this, not the least of which is to guard against the possibility of dissatisfaction and unhappiness that may well end in litigation."
Laidlaw’s passion for estate law was fostered while articling at McCarthy’s in the mid-1980s, one of the few firms at that time with a dedicated practice in that area. More than half her practice involves contested estates prepared outside her firm.
"Demographically, we’re looking at a period in history in which there is a great deal of wealth in transition, and for that reason alone, it’s more of an issue for many people," she says. "People are generally seeing the importance of not just piecemeal planning, but understanding the whole picture.
"There’s also a greater awareness by beneficiaries of what their rights may be and their possible recourse," adds Laidlaw. "The idea is to ensure you make the will as ironclad as possible."
She also points out that most disputed wills are settled in mediation, in large part because they are not based on matters of law or money, but on matters of the heart. "So often, estate disputes are grounded in emotion," she says.
"Take the family cottage, for example. It’s an asset that creates huge emotion and can be the source of great dissension, because it can mean something different to each member of the family. We must consider wealth in the broadest sense, not just finances. It’s ‘wealth’ in the sense of what a person has to pass on, whether it’s in the form of assets or philosophies or ideologies or family values."
Future competition
Wealth management grew out of wills and estates, an area of law that has been buffeted recently by intense non-lawyer competition, particularly from the do-it-yourself will industry. And like their colleagues in estate law, wealth management lawyers do not have this particular practice area to themselves.
Many other professional groups are quickly recognizing the potential in wealth management practice. In Great Britain, for instance, banks are moving into the wealth management niche. Taxation and accounting firms are also zeroing in on this lucrative area.
"If lawyers in Canada don’t take a proactive role with their clients, they’ll find this niche is going to be very quickly taken over by the institutions that have the mechanisms and where-with-all to do it very effectively and cheaply," warns St. Pierre.
"If we are not able to keep up, we’ll find that others will keep up for us."
|
