Law Times

Page 8 June 20, 2016 • Law Times www.lawtimesnews.com When to use a financial divorce specialist BY JUDY VAN RHIJN For Law Times T he increase in grey di- vorces is driving the growth of financial forecasting as a tool in property arrangements. While family lawyers can divide a cou- ple's assets equitably at a set point in time, specialized financial professionals can make projec- tions that show how that division translates into long-term income. Their use is already well accepted in collaborative circles, but prac- titioners hope they will become an integral part of mediation and general practice as well. "It is really important to sur- round yourself with good pro- fessionals," says Reesa Heft, a family lawyer and owner of Heft Law in Toronto. "When you get to grey di- vorces, people's finances are a lot more complicated than when they are in their twenties. It's re- ally helpful to have someone un- ravel some of the issues that are beyond a lawyer's scope." The Chartered Financial Di- vorce specializations have been developing over the last 15 years. Linda Cartier is the president of the Academy of Financial Divorce Specialists, which is an educational body that provides training for financial planners. "Members have to have a fi- nancial accounting designation already," advises Cartier. "Every- one working in this area has a cer- tain percentage of their practice going through marriage break- down and have seen the devastat- ing effects in that situation." The cornerstone of the spe- cialization is financial forecast- ing, which goes beyond the allo- cation of assets between parties. "Asset division is what it is," notes Heft. "You can do differ- ent deals, but the math is still the same. It's based on a fixed date — the date of separation — when it's possible to identify the assets. There are no variables with that, but with income there are always variables. The payor could have a catastrophic health episode, take retirement, or die, or the econo- my could have a horrible down- turn. If you take the assets and invest them wisely, a financial person can do a calculation of what sort of return you will get." Marion Korn has set up a mediation business called Mu- tual Solutions based in Toronto in partnership with Chartered Financial Divorce analyst Eva Sachs. Korn describes Sachs' skillset as "the ability to collect financial information and use it in a way to illustrate outcomes." "We are increasingly getting more challenging cases. They are difficult to do without some- one like Eva who can, with ef- fectiveness and efficiency, pull information together with great clarity," says Korn. Cartier points out "people are making huge life choices." "It's important to see what it's going to look like if you give away investments and pensions. If you look down the road, you might make a different deci- sion," she says. Cartier advises that there are many factors to be taken into account in making projections, such as rates of return, cost of living, tax implications, and the family dynamics particular to the parties. "Someone might need to be retrained before they can stand alone. There might be more debts than assets. Just the fact that you're taking one residence and now having to look after two resi- dences means that the same dol- lars for a family that were together need to be stretched," she says. Cartier feels that the legal profession is slowly becoming more aware of the designation. "They may not know the dif- ference between someone who is a salesperson, a designated financial planner, or a char- tered financial divorce special- ist. Many think they are getting what they need from the wrong planning professional. But once lawyers have used us, they real- ize it's not their area of exper- tise," she says. "We are taking work off them that they don't really enjoy. Their clients get a better end result more cost effectively. They are put in a powerful position to re- organize so they can go forward." Cartier notes that, so far, col- laborative lawyers seem to be the most receptive to engaging financial professionals. Korn hopes to see the use of CFDSs spread beyond collaborative law. "I would love to see their skillset used in family media- tion. Not all families should have to bear the higher cost of col- laborative practice. Just because mediation is less expensive, they shouldn't miss out on that extra piece," she says. Their use is also not con- fined to the retirement sector, although those tend to be the clients with the most money and complexity. "Grey is a growing sector, but there are a lot of middle-aged couples, too," says Cartier. "They may have embedded capital gains, estate planning concerns, second, or third mortgages. Children may or may not be connected to both parties." "There has to be enough money to warrant having a fi- nancial specialist come in," says Heft. "It's also very helpful for people who just can't wrap their head around doing the financial piece. Many clients are very used to having other people do things for them. They almost need a fi- nancial babysitter." Cartier confirms that apart from projections, the CFDS will also demystify some of what cli- ents don't understand when they go to their lawyers. "Lawyers are very familiar with legalese and don't tend to put it in layman's terms. We pro- vide a bridge. We also do a lot of work in budgeting and financial management," she says. Korn and Sachs have co- authored a self-help book en- titled When Harry Left Sally — Finding Your Way Through Grey Divorce. Their service emphasizes the need to gather all the relevant financial infor- mation before any problem- solving starts. "We do a very complete cash f low analysis on spend- ing and create as many analyti- cal spreadsheets as possible. It's more important to keep testing and forecasting the older they are. Few things will change," she says. "When they understand ex- actly where the money is going, it can help them to decide how to divvy things up — whether they can keep the house or need to sell it. We cut through the emotional background so they understand their position and reconsider a deep attachment to things they can't afford," she says. LT FOCUS ON Family Law Focus When you get to grey divorces, people's finances are a lot more complicated than when they are in their twenties. Reesa Heft Marion Korn says her mediation business helps clients 'cut through the emotional background' to figure out what they can afford post-divorce. REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! AVAILABLE ONLINE AND IN PRINT With more than 300,500 page views and 100,000 unique visitors monthly canadianlawlist.com captures your market. FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com www.canadianlawlist.com &/$)"/$&:063-*45*/(8*5)"(0-%034*-7&31"$,"(& Get noticed by the lawyers, judges, corporate counsel, fi nance professionals and other blue chip cilents and prospects who fi nd the contacts they need for Canadian legal expertise at canadianlawlist.com with an annual Gold or Silver Enhanced listing package. Untitled-3 1 2016-06-16 8:18 AM

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