Peel Halton Collaborative | Financial Divorce Specialist

The Impact of COVID-19 on Business Valuations

May 12, 2020 6:15 pm Comments Off

Ian Lobo

by Ian Lobo
Original post: https://sbpartners.ca/business-valuations-and-covid-19/

SB Partners Valuations Division participated in a Virtual Town Hall focused around the impact of COVID-19 on business valuations. The talk was organized in collaboration with several global valuations governing bodies including the Canadian Institute of Chartered Business Valuators, American Society of Appraisers, and The Royal Institution of Chartered Surveyors.

A panel of valuators and appraisal experts offered practical advice on the impact of the pandemic on valuations and those whose charge is to complete them.

Listed below are five key highlights:
1. Valuation conclusions will be lower in comparison to the periods prior to COVID-19, all else equal.
While being a rather obvious expectation, the Pandemic is causing declines in value as profits are diminished and overall risk has increased. From a quantification perspective, one of the esteemed panelists for the town hall indicated that he was expecting on average a decline in the total value (enterprise value) in order of magnitude of between 10% to 15%.

2. A change in valuation modeling
Valuators will be hard-pressed to capture the volatility of earnings and cash flow generation as well as the risk and uncertainty in their cash flows using “normal” valuation models. Of all the tools in a valuators tool kit, the Discounted Cash Flow Model and variants will likely be the preferred and most generally accepted means of deriving an appropriate valuation conclusion. This is because the methodology enables valuators to capture both the declines and ultimate improvement in earnings over time adjusted for risk capturing the swing in a company’s business cycle as caused by the Pandemic.

3. Valuation dates – (Pre and Post Pandemic)
A fundamental valuation principle is that “Value is determined at a specific point in time. It is a function of facts known or knowable, and forecasts made at that particular point in time”.

In completing a valuation, the date selected will be important, as with any valuation the valuator is required to use all known facts and information knowable at this date, however, given the speed of progression of COVID-19, there could be vast differences in value conclusions over a short period for any company. A valuation completed on December 31, 2019, would likely be significantly higher than a valuation completed on March 31, 2020, just three months later. Under any circumstance, both internal and external changes that impact the prospects of a business will likely lead to a change in value.

In the context of valuations for family law, equalizing on values that were determined well in advance of the onset of the Pandemic (i.e. Prior to March 2020) will prove challenging for the business-owning spouses, as the intrinsic values determined will likely be significantly higher than the amounts the owner could actualize realize on in a transaction following the start of the Pandemic (declared globally by the WHO March 11, 2020).

4. Cognizant of management and client biases
Now more than ever, client biases from minimal valuations for family law purposes in order to reduce amounts paid to ex-spouses for equalizing family assets; to management taking ‘baths’ on asset (i.e. goodwill and intangible assets) impairments, will require valuators to maintain a healthy level of professional skepticism when vetting assumptions regarding the outlook of subject companies, and the volatility of expected cash flows in relation to the impact of COVID-19.

Value is prospective as it is the present value of all future benefits anticipated to accumulate by virtue of ownership of a business. With so much uncertainty and volatility during this current environment, it will be difficult for valuators to conclude on intrinsic valuations of companies, as management’s outlook will need to be checked to industry and economic outlooks, wherever possible.

5. Merger and Acquisition Activity, Private Equity and Dry Powder
It was also communicated that there is some optimism for M&A transaction values and volumes despite the negative impact of COVID-19 and investors’ current palettes for risk. However, private equity firms are expected to take advantage of depressed values caused by the Pandemic considering the continued large amount of available dry powder, mitigating the impact of the decline in intrinsic valuations due to COVID-19.

As Canada is faced with significant unemployment rates, worsening as the virus decimates the economy, a significant Federal deficit that is exploding, future tax increases are a given. The economic damage occurring daily is also significant. However, recovery is also a given, what goes down must come up, it is only a question of timing – the same will hold true with business valuations.

by Ian Lobo
Ian is Vice-President of the Valuations Division with SB Partners, with over 15 years of experience in professional accounting and advisory services.

SB Partners LLP
3600 Billings Court, Suite 301, Burlington, ON , L7N 3N6
Tel: 905-633-6342
Toll-Free: 1-866-823-9990, ext. 6342
Fax: 905-632-9068
Email: ILobo@sbpartners.ca

Child Support Payments and Eligibility for the Dependant Tax Credit

February 4, 2019 4:15 pm Comments Off

By Bronwen Bruch

How support payment details can enable or impede claims of an eligible dependant on your income taxes.

The separation process broaches a variety of complex issues, such as finance, family law, and mental health—it is no wonder, then, that the process often requires the combined efforts of collaborative professionals to reach an optimal outcome. Likewise, a robust Separation Agreement considers input from diverse specializations and a variety of relevant precedents and policies. This attention to detail is particularly valuable in the case of child support and its evolving influence on tax credit eligibility; if not appropriately managed, this legal and financial issue can result in a potential forfeit of thousands of dollars in tax refunds.

The Eligible Dependant Issue

The eligible dependant amount, as outlined in section 118(1)(b) of the Income Tax Act, is a tax credit available to qualified single parents with custody of children below age 18. A prominent limitation, however, lies in the issue of shared custody—if both parents support the dependant(s), who can claim the eligible dependant amount?

The situation is complicated by a disparity between precedents in family law and the Income Tax Act. Often, in cases of shared custody, support obligations are calculated with the assumption that the higher-income parent will pay a “set-off” amount to the lower-income parent. For example, after entering both parents’ incomes into the Child Support Table, the payment obligation of the lower-income parent would be subtracted from that of the higher-earner for a net payment amount. Unfortunately, under subsection 118(5) of the Income Tax Act, this one-way method of payment only allows for the lower-income parent, the “payee,” to claim the eligible dependant amount (provided he or she satisfies additional eligibility criteria, such as single marital status).

Dependant Claims By Both Parents

Subsection 118(5) of the Income Tax Act does not allow for an individual to claim the eligible dependant amount if he or she is obligated to pay child support; however, subsection 118(5.1) allows for an exception provided both parents pay child support to each other (as opposed to one party paying a set-off amount). In instances of one dependant, parents can then choose to alternate eligible dependant claims; in instances of multiple dependants, each parent is eligible to claim one dependant (again, provided all other requirements for eligibility are also met).

To qualify, the obligation of both parties to pay support must be included in the Separation Agreement. Moreover, as the recent appeal of Harder v. The Queen [2016] demonstrates, the Canada Revenue Agency may not only require the written confirmation of two-way payments, but also evidence of those payments. In the case of Harder, the paying parent forfeited thousands in tax credits due to a lack of written or actual evidence of two-way payment obligations—in paragraph 11 of the appeal, the court stressed the necessity of payment evidence such as cheques or e-transfer records.

Unfortunately, the scenario of two-way payment obligations can often give way to new concerns. For example, if one parent earns a significantly lower income and depends on payments from the higher-earner in order to fulfill his or her own payment obligations, this introduces the potential for bouncing support cheques.

Evidently, the matter of shared custody dependant claims does not often allow for a simple solution, but a consultation with a trained professional such as a Chartered Financial Divorce Specialist, an Accredited Family Mediator with a financial background, or a Collaborative Financial Professional can help to clarify your options.

If you have any questions or would like to discuss the matter further, please do not hesitate to get in touch; we are more than happy to help.

Tired of Reading About the “Housing Bubble?” Me Too.

June 5, 2017 3:43 pm Comments Off

Mariam Gage

By Marian Gage

The cost of housing has become a big issue for families who separate in Halton. It seeps into almost every negotiation or mediation as an issue…a challenge…a jackpot…depending on the family members’ goals.

To be clear, the law has not changed. It’s the other stuff that changes now – the decisions people make when they separate and the options available to people who are now looking to live in separate homes.
For those of us who work in Collaborative Practice and family mediation it’s all very significant. Our clients’ mutual goals are at the root of these processes. Goals such as:

Residing in the same school catchment area so the children don’t have to change schools;
Both parents residing near each other to accommodate a shared parenting schedule; and
Maintaining homes with similar standards so the children feel “at home” in both parents’ residences.

Often, one parent will purchase the other parent’s interest in a matrimonial home to allow the children to remain in the neighbourhood. These days we’re seeing house prices so high that it’s not as easy for a newly-single parent to finance that kind of a “buy-out.”

We’re seeing situations where it might have been easy enough for one spouse to purchase the other’s interest on the day they separated, but six months later (it can take a number of months to get from the point of deciding to separate to the point where these decisions are made) that house might sell for substantially more if it were listed on the market.

I’ve reached out to Collaborative family professionals and mediators to learn about some of the solutions their clients have come up with to try to meet their goals when it comes to the family home. In many of these situations, it’s not what a judge would do (you can talk to your lawyer about what a judge would have to do – they are bound by the law).

Here are some of those solutions:

Right of first refusal on sale

In some cases, one keeps the house and the other holds a “right of first refusal” where he or she would have the first opportunity to purchase the property before it is listed for sale. I am advised that in these cases the party with this right has not exercised it and the property has been sold on the open market.

Continued joint ownership with minimal draw

In one case a separated spouse agreed to sell her share of the equity in the home to her former spouse based on a mutually agreed amount, however, the “selling” spouse was only taking what she needed to satisfy the down payment on her new home. For the balance owing, they signed a promissory note which paid the “selling” spouse the greater of a percentage of a future sale price proportionate to the amount owing, or simple interest at 5 per cent per year for the outstanding amount to a maximum number of years in the future.

Defer sale

In some cases separated spouses are agreeing to remain on title, although only one will remain in the home. They may come up with a plan to determine whether there will be continued contribution to mortgage payments and (in some cases) other operating costs. They agree on a time frame for the sale.

Formal appraisals

Certified appraisers will value the property (separated spouses may choose to retain one neutral appraiser who works for both of them, or in some cases they work with more than one appraiser and establish a mid-point). One spouse would purchase the other’s 50 per cent interest.

There have been other cases where separated spouses have considered obtaining a valuation at the date of separation and a valuation at the current date to determine the percentage increase in value from separation to the date they were ready to address the issue, and then agree on some amount in between taking into account commission fees, etc.

The issue with the formal valuations now seems to be that many houses are selling above what certified appraisers would value as their worth.

Ignore valuations

There have been still other cases where parties have agreed not to use the price at which they anticipate the house could be sold and instead one party has agreed to transfer his or her interest to the other for less than the expected “market value” so children can remain in the home.

Sale on the open market

There have a been a number of cases where the house was simple listed and sold for a lot of money. For some, the parties were happy to see how much they would receive from the sale of their home. For others, it was disappointing as one former spouse had hoped to purchase the other’s interest (they simply could not settle on an appropriate price).

The difficulty, then, is that everybody needs a place to live and it’s not an ideal time to purchase one home, let alone two.

I often advise my clients to seek the assistance of a Financial Divorce Specialist who can help them see their options and make sound financial decisions that work within their budgets.

As always, when parties are working in a Collaborative process, or in mediation, there are far more options available and it’s much more likely that a family will end up with the arrangement that works best for all.

Disclaimer: This article is only intended for information purposes and is not intended to be construed as legal advice.

Marian G. Gage, B.J., LL.B., Acc.FM (OAFM), CS (LSUC)
Certified Specialist in Family Law
165 Cross Avenue Suite 301, Oakville, ON L6J 0A9
Tel: 905-338-7941 ext 229
Email: mgage@bgfamilylaw.ca
www.bgfamilylaw.ca

The Second Marriage: Financial Considerations

March 21, 2014 8:01 am Comments Off

If you are going through the divorce process the first thought after reading the title of my blog is “Never Again!” right? I know it was for me and, in some ways, it’s true what they say, “You don’t know your spouse until you divorce them!!” Some divorcees move forward, embracing their independence. I know I painted my bedroom pink…because I could! But all that new freedom aside, it tends to be a couples world. It’s also nice to share moments in your life with someone special so, for me, I recanted my “Never Again” and did it a second time.

Now it gets complicated, for sure. We each had our children with our first spouses so there’s that to consider. So, if my husband and I owned our home jointly then if I died my half would revert to him. My husband could then go out an find a new mate and enjoy all the fruits of my labour with his new spouse. My kids? They would get nothing. See how this works? So what can you do to help prevent your dying wishes from going awry? Consider the following:

1) A prenuptial agreement. Some say it make a business out of a loving relationship but I think just the opposite. It protects each of your family’s wishes, their kids and yours, and sets the stage for a well thought out transition of wealth plan that is, hopefully, agreeable to both of you. This may stop future feuding once the initial feelings of love and relationship newness wear off and you start to feel that, perhaps, the relationship is a little unfair, leading to potential resentment and chaos.

2) Own your home as tenants in common, rather than joint tenants, based on a percentage of what each of you put into the equity of the home. I think, though, in terms of fairness, anything you both work on together, while married should be split 50/50. I believe family law would support this as well. Keep in mind that if your wealth is so lop-sided that, if you pass away, your spouse would be homeless, that might cause an issue. There are financial solutions available such as purchasing a life insurance policy to offset any deficiencies in providing reasonable housing for the surviving spouse.

3) Did you know that when you say, “I do”, “I will” or whatever acknowledgement of entering a marriage contract is deemed appropriate for you, that your Will is null and void? Yes, you have to renew your Will. Funny thing is, I tried to renew my Will just days before my wedding and I couldn’t do it. Not really but sort of….I had a temporary Will that stating…”In anticipation of marriage I intend my new Will to state…..” and then we formally re-did it when I returned from my honeymoon. Needless to say, I avoided that sky-jumping opportunity, on my honeymoon, when it presented itself.

4) Check the beneficiaries of your registered plans. Remember that RRSP’s and the like, transfer to a spouse tax-free on first death but they are taxed to anyone else you many want to bequeath…such as your children. Lastly, on this note, depending on how your Will is written, if you leave your RRSP assets to your children your Estate pays the tax which could be as high as 46.41%, or roughly half, and the kids get the full value of the RRSP.

I advocate that a well-thought out plan can save many years of potential resentment and put you both on a fair playing field right from the get-go….so you can enjoy the feeling of being protected, financially, for you and future generations.

My advice? Have a well thought out plan before you stroll down the isle. It may save years of grief if you don’t…and it will set you on a good path to enjoy your new marriage.

Financial Disclosure in Family Law

March 12, 2014 10:16 am Leave a Comment

By Kathryn Jankowski, B.A., CFP, FDS, FCSI

Chances are, if you are reading this post, you, or a close friend or relative, is going through the divorce process. Overwhelming ranges of emotions and lack of clarity may be prevalent but add to this the need for the accumulation of all your financial documentation …all this can add to the stress of it all.

So what do you need to provide to your lawyer or mediator? Here’s the list:

1) The last 3 years of tax returns. Not only that but your Notice of Assessment as well. Just because you disclose what you thought CRA wanted to know it doesn’t mean your return was assessed as filed. There may have been some discrepancies as to what CRA has and what you filed.

2) Pay stubs for the most recent pay periods. If you get paid bi-weekly then a month’s worth of pay stubs will ensure that all your employer-based savings plans and other employment-related fees are all captured.

3) Bank Statements. Some of the bank statement could be in your name, the name of you and your spouse or in a business name. All that needs to be disclosed as well.

4) Brokerage Statements. Or any investment related statements including taxable accounts, Tax-Free Savings Accounts and any registered plans such as Registered Retirement Savings Accounts and Registered Educational Savings Plans.

5) Credit Card Statements. This would include Visa, Mastercard as well as any lines of credit. Also, if you have lines of credit are they secured lines or unsecured?

6) Statements from pension plans, profit sharing retirement plans, employee share purchase programs and any other employer-driven savings plans. If you were employed by the same employer before the marriage you might want to seek out what the value of these savings plans were before the nuptials as well.

7) Real Estate valuations. I strongly recommend getting an appraiser to do this job. Not a real estate agent, an appraiser. This valuation would be for the principle residence as well as any recreational properties or investment properties.

8) Mortgage Statements. Term. Amortization. Mortgage rate.

9) Insurance. Both health insurance, even if it is covered by your employer, and life insurance, whether it be a group benefit through an employer or your own personally owned plan.

10) Business Interests. If you own your own business all the details of your business must be disclosed such as tax filings (if they are filed separately from your own return) and audited business statements. Typically, business valuators have to come in to do an assessment as to the value of the business.

I would advise that you get all this together even before you go see a lawyer…to save time and, potentially, some legal fees. Keep in mind, too, that there are other experts out there that can help with the disclosure documents….such as a Financial Divorce Specialist.

Divorce and Financial Credit: What you don’t know can hurt you!

June 6, 2013 3:02 pm Leave a Comment

You have struggled with the emotional and psychological issues of our divorce and now it’s time for the financial side. You have assessed your outstanding credit obligations as well as your assets and have decided to divide them equally, each of you walking away with the responsibility of paying off specific debt. You think you have finally come to an agreement so you settle and move on to start a new life. You work hard over the next few years and start putting money away to get you a new home. You think you’ve made it, found a perfect opportunity, so you go to the bank and ask to qualify for a mortgage, then comes the bad news “you don’t qualify due to poor credit history”. How can this be? You have paid everything off and your spouse should have taken care of his/her share, or have they? This can be devastating news when so much time has been spent trying to get your life back in order. So what went wrong and how cold this happen?

Financial matters are one of many issues that can drive couples apart. Often one partner is the spender while the other is far more frugal and watches every penny. You can also have two parties just as equally devoted to their finances but with one individual less knowledgeable who just goes along faithfully with whatever their partner agrees to. Whatever your situation is unless you understand your assets as well as your credit obligations in the marriage you could be in for a big surprise.

During your marriage you and your partner will apply for credit cards, share lines of credit, take out a mortgage, sign on car loans, and hold various other joint liabilities such as “buy now pay later plans”, and possibly investment loans. All these facilities get reported to the credit bureau on a regular basis from the respective lenders. The credit bureau also keeps track of other mutually responsible transactions like cell phone plans, legal judgments against you, collections, as well as bankruptcies and consumer proposals. So what does this mean? All this reporting and updating is being done to establish your individual credit worthiness or ability to repay debt. This comes disguised in the form of a credit report and further revealed as a credit score to would be lenders. So why is this important?

When both partners are disclosing their respective assets and liabilities, many times they forget items that ere taken out years before and have never been used or loans that may have been signed for but now don’t recall the transaction. So you both decide that your agreement will make each party responsible for the pay down of specific debt, normally if it’s a debt associated with a particular asset like a car, it will go with the individual who keeps the car. The problem however, occurs when both parties have jointly signed on a credit obligation and only one of you agrees to keep up the payments. If you signed on that car loan as well, then what happens if your partner stops paying. Although you think you have an agreement in principle your lender will not see it that way and should your partner stop making payments not only is their credit rating affected but so is yours. Those cell phone agreements, maybe both of you signed on the contract now one of you rakes up a huge bill and decides not to pay for it, you guessed it, it becomes you problem as well. That joint line of credit you took out years ago and never used and forgot about, guess what the other party has now decided to use it and not pay it back, you may not get those collection calls because you may have relocated but that first visit to the bank will give you a new reality check. All these lapses in repayment and unpaid credit wreak havoc on your credit rating as well as your credit score, which is an indication of your worthiness to potential lenders. In other words, can they count on you to repay the debt on time and without missing any payments? So how do you protect yourself?

The first step is get informed, understand what family liabilities exist on your credit report, order a copy usually a paid copy is best because this will give specific details on the type of liability and the ownership of that liability whether it is individually held or jointly held. This is often not undertaken by either party and leaves open the possibility of not reporting or closing out old and unused joint credit, leaving an opportunity for potential misuse by either party. Do an inventory on all the credit cards, lines of credit, purchase plans and other charges against your name. If you need help, see the assistance of a Financial Divorce Specialist to help you make sense of it all and guide you through the process.

For all joint liabilities, you will need to make sure that the lender will either re-write you out of the loan or credit obligation and if not you will need to make arrangements to get this facility paid out from family assets and closed. You take a big credit risk by not doing this because you will not be able to protect yourself should the other party not fulfill their end of the bargain leaving you with deteriorated credit and the inability to borrow, rent or with the employers wanted credit checks more often could keep you from getting a job. This holds true for your mortgage as well, make sure it is re-written and that the individual keeping the home can qualify to carry it on their own, other wise you may have no option but to sell the property. Don’t leave yourself exposed to potential credit meltdown, know where you stand and don’t just settle…Settle Smart!

Jo-Anne Fiore, BA, CFP, RRC, FDS
Smart Split Divorce Solutions

Profession: Financial Divorce Specialist, Family Mediator
Tel: 647-367- 9229
jfiore@smartsplitdivorce.com
www.smartsplitdivorce.com

Tax Tips for Separating Spouses

February 20, 2013 1:40 pm Leave a Comment

By Bronwen Bruch

Financial Professionals on a Collaborative Team provide expertise around the financial ramifications of separation.

Since we are approaching tax time, I thought I would provide you with some tax tips.

1. Spousal support and your pay cheque: If you are employed and you make spousal support payments, you can ask the Canada Revenue Agency (CRA) to authorize the reduction of the amount of income tax that your employer is deducting from your pay. Instead of waiting until April of next year for the government to send you a refund cheque, you can have a significantly higher monthly net pay now. Send a completed Form T1213, Request to Reduce Tax Deductions at Source, to you tax services office.

2. Shared Custody and claiming your children on your income tax return: You may have heard that if you are the payor of child support you are not entitled to claim the Amount for Eligible Dependent (or the old Equivalent to Spouse credit). This is sometimes true. However, when there is shared custody and both spouses have sources of income, it may not be the case. This credit could provide you with a refund of over $2,000 each year, so it would be in your best interests to discuss this with a Financial Divorce Specialist. And if you find out that you are entitled to claim the Amount for Eligible Dependent for one of your children, you may also be able to claim the Child Amount.

3. Tax implications when separating spouses divide their assets: Separating spouses go through a process of dividing their assets. Listing the values of each of their assets is just the first step int he process. They also need to take into consideration the tax that would need to be paid if the asset were sold. For instance, if one spouse kept a house worth $400,000, this would not be equivalent to the other spouse keeping the RRSP’s worth $400,000. Why? Because when the RRSP’s are withdrawn, tax has to be paid on them, so in essence, they are worth $400,000 less taxes. Since taxes are not paid when the house is sold, the house is actually worth more than the RRSP’s. And to complicate things more, there is the question of what tax rate should be used on the RRSP’s? There are many more questions around dividing investments or pensions and the tax implications. Again, a Financial Divorce Specialist could guide you through this process.

Separating clients are served very well when they decide to negotiate a separation agreement the “Collaborative” way. Collaborative Family Lawyers know the law, and are trained to advocate for their client with a collaborative approach. Family professionals are called upon for their expertise around parenting plans, and Financial professionals are called upon for their expertise around separation finances. Collaborative Professionals feel that 3 heads are better than one, and the best part is that the couple are not paying 3 times the cost. It will often be less than the alternative. Each member of the Collaborative Team will take on the pieces that they have expertise in. And the ultimate goals is that the couple and the collaborative professionals will create a quality separation agreement that will serve the couple well in their future separate lives.

Brownwen Bruch, BMath, CMA, FDS

Certified Management Accountant
Financial Divorce Specialist
Financial Family Mediator

THE TAX MANAGEMENT CENTRE
14-2530 Sixth Line, Oakville, ON L6H 6W5
T: 905-257-6528 F: 905-257-4221
bbruch@taxmanagementcentre.com
www.taxmanagementcrentre.com

January Divorces

December 31, 2012 3:29 pm Leave a Comment

By Kathryn Jankowski, B.A., CFP, FMA, FDS, FCSI
Vice President & Financial Divorce Specialist

It seems January is the busiest month for divorces. Perhaps this dovetails with New Year’s Resolutions and starting anew or perhaps families don’t want to create stress in the family home over the holidays. I remember my spouse leaving the family home on the 26th of December which gave new meaning to the words “Boxing Day”!

There might be other reasons you might want to wait until the new year to go separate ways…or even select a separation date in the new year even if you went splitsville in 2012. Selecting a date for splitting your Net Family Property can have some repercussions on your tax filings. There might be some savings involved in items such as childcare expenses depending on which side of the fence you are sitting on. Employee bonus’ can be savoured or if you are retired ~ pension splitting options might be a consideration.

Keep in mind that even though you went your separate ways in, say, November or December, it doesn’t matter. What does matter is agreeing on your separation date and it might be advantageous to consider choosing a date in the New Year!..or not!!

The “Gray” Divorce

November 6, 2012 4:51 pm Leave a Comment

Kathryn Jankowski

By Kathryn Jankowski

People of all ages divorce but there seems to be a rise in the percentage of people who are divorcing later in life. Why does that matter? The one very profound fact is that when you are left with half of your wealth it may not be enough to support the retirement lifestyle that you’ve worked so many years to accomplish. With half of the retirement income gone to support your spouses income needs, ‘gray’ divorcees may have to look for other alternatives for income such as going back to work or taking in a boarder to two.

‘Gray’ divorcees have less time to recover financially so their financial needs become a big motivating factor in their life. Because they realize that living with someone is less costly than living alone they may be drawn to find someone to co-habitate with or they may even consider remarriage for financial reasons. These options may bring about a whole host of other considerations such as how to co-habitate or remarry while ensuring that your new spouse doesn’t have a foothold into your children’s intended inheritance.

Depending on where ‘grays’ live, sometimes downsizing the family home home and moving to a more rural community could be an answer. Of course, this brings a host of other issues such as proximity to children or other important family members as well as having to find new friends to socialize with in an environment in which there is no familiarity.

The golden years may not be looking so golden! Of course, I’m biased when I say that a good financial planner can go a long way in ensuring the right choices are considered. I would also suggest seeking legal advice before co-habitating or remarrying to ensure you aren’t in a position to have to share your half of your half!

Kathryn Jankowski, B.A., CFP, FMA, FDS, FCSI
Vice President, Financial Divorce Specialist

26 Wellington Street East, Suite 710
Toronto, ON M9B 2Z5
416-640-8591
kjankowski@tewealth.com

The Emotional Divorce

October 3, 2012 11:13 am Leave a Comment

by Fareen Jamal

“What separates those who can obtain a smart divorce from those who can’t is this quality of being prepared to move on. They’ve done their mourning, to the extent that mourning is involved. And they have come to recognize that they are not victims. ‘This is what life has to offer. So let’s move on.”

~ Jeffery Wilson, cited in Deborah Moskovitch, The Smart Divorce, (Chicago: Chicago Review Press, 2007).

Often, couples fail to properly address their grief following the breakdown of their relationship and the loss of their marriage. The grief of losing a life shared, your identity as a couple, your security and even your beliefs If you fail to come to terms with the fact that you are divorcing emotionally from life as you know it, the legal process of divorce can become almost impossible. I have had many a file where the parties’ inability to let go of their anger blinded them from noticing the damage their decades of litigation had on their children and personal lives. They were going through the legal divorce failing to address their emotional divorce.

Failure to identify this grief and to deal with it constructively can result in a long, arduous and expensive legal process.

Arnold Schwarzenegger comments on the emotional impact of his divorce from Maria Shriver, after he fathered a love child with the couple’s housekeeper, in his upcoming book, Total Recall: My Unbelievable True Life Story. The New York Daily News revealed that Mr. Schwarzenegger continues to believe that he is in denial and still hopes for a reconciliation with Ms. Shriver.

Divorcing couples must acknowledge that a divorce can divide assets and liabilities, and arrange for child or spousal support but it cannot punish your spouse for his or her bad behaviour during or after the marriage. It cannot guarantee that your support payments will be made or that access schedules will be smooth and problem-free. It cannot make your spouse change, nor will it return your life to the way it was.

Collaborative family lawyers recognize and address the grief. Perhaps you need to give yourself a period of mourning. Then focus on how you want your life to look. Create a strong support network and recognize that you are not alone. Professional help through parenting experts, financial specialists and therapists can also help regain control of your life. Collaborative family lawyers routinely draw on other experts to assist in the process.

As you deal with your grief, it will become easier to make legal decisions that are in your best interest. Divorce with dignity, and move on. And find a process that will support you in doing so.

Fareen Jamal
Bales Beall LLP
2501-1 Adelaide Street East
Toronto, ON
M5C 2V9

Tel: 416-203-4538
Fax: 416-203-8592
fjamal@balesbeall.com

Lofty Collaborative Goals

August 21, 2012 2:28 pm Leave a Comment

By Diane F. Daly

There are a small number of family law matters that head to court and must be decided by a judge. They often involve parties, one or both of whom, have mental health issues, or drug, alcohol or other addiction issues. In some court cases, the parties are feeling so angry, hurt, afraid or betrayed that they cannot or will not consider any alternative to court. They become entrenched in their positions. Hollywood is rife with examples. Remember Jon and Kate Gosselin? Charlie Sheen and Denise Richards? How about the very public and ugly custody battle between Alec Baldwin and Kim Bassinger over their daughter, Ireland?

Fortunately, that is a very small percentage of family law matters. There are also Hollywood divorces where the parties used Collaborative Family Law to deal with their separation and divorce amicably, collaboratively, and privately. We heard virtually nothing of the details of the divorces of Kobe and Vanessa Bryand or Madonna and Guy Ritchie, or Robin Williams and Marcia Garces Willes. They all used Collaborative Family Law to settle their custody, support and property issues.

In collaborative practice, the separating couple retains a well-trained team of experts – collaborative lawyers, family specialists and financial specialists. The team’s goal is to help the separating couple resolve all matters arising out of their separation with integrity and in a dignified and respectful way, without going to court. Each member of the Collaborative team utilizes his or her own expertise to assist separating couples identify their underlying needs, desires, concerns and fears. We help clients maintain control of their lives and their process. And compared to court, it is less costly, speedier and much more private.

Collaborative practitioners believe in the integrity of the collaborative process. We believe that, first and foremost, families need to reconfigure their family unit in the best interests of their children. Husbands and wives may become ex-husbands and ex-wives, but hopefully not ex-fathers and ex-mothers.

Collaborative practitioners strive to facilitate their clients’ empowerment through the process. We want to offer the best and highest of what each professional has to offer to ensure the best possible result for each of the separating parties, keeping the children’s best interests front and centre.

Dedicated Collaborative Practice professionals undertake ongoing training and continuing education to ensure we do our jobs to the best of our ability. And it is both a sophisticated and varied education. In September, many Collaborative Practice professionals will attend the Ontario Collaborative Law Federation (OCLF) conference in Barrie. We will take workshops on a whole range of subjects: understanding neuroscience to assist clients to obtain a better outcome; engaging the reluctant spouse; integrating advocacy and neutrality to avoid and manage impasse; overcoming impasse; powerful non-defensive communication; using technology to improve inefficiencies in your Collaborative practice team.

In October, the International Academy of Collaborative Professionals (IACP) will hold its 13th Annual Networking and Educational Forum in Chicago. There will be workshops on: the value of a child specialist in negotiating custody and residential arrangements for children; the value of a family business expert where divorce involves a family business; learning to recognize different communication styles; the use of forensic accounting in Collaborative Practice, how to deal with domestic violence in Collaborative Family Law cases; learning to assist clients with balancing legal mandates for support and the need for flexibility tailored to individual family financial circumstances. Seasoned, experienced collaborative lawyers, family specialists and financial specialists will train and mentor newcomers.

No matter whether it is a Collaborative Family Law Lawyer, Collaborative Family Specialist or Collaborative Financial Specialist – we are all learning and sharing practical skills, training, exploring, discussing and debating constantly. As Collaborative Practitioners at the forefront of an exciting and dynamic movement, our goals is to provide the finest expertise to assist people to separate and divorce, and reach resolution with dignity, respect and integrity.

Diane F. Daly
Collaborative Lawyer, Mediator & Arbitrator
165 Cross Avenue, Suite 301
Oakville, ON L6J 0A9
Tel: 905-844-5883
Fax: 905-844-9765

The Collaborative Team: Does the Financial Professional just act as a number cruncher?

May 22, 2012 3:07 pm Leave a Comment

by Bronwen Bruch, BMath, CMA, FDS

The answer to this question would be sometimes; but not always. A Financial Professional can fill many roles on a Collaborative Family Law file.

1. Collecting financial data from the clients, and preparing and presenting financial statements to the rest of the Collaborative team.

2. A Neutral. Some Collaborative Family Lawyers find having a neutral in the room to facilitate the discussion, enhances the Collaborative process. Both Financial and Family Professionals are called upon by lawyers to come to the Collaborative table as the neutral. A Financial Professional in this role can also provide creative solutions to some of the financial issues that can frequently become obstacles to resolution.

3. Develop long term forecasts based on alternative financial scenarios, as opposed to short-term snapshots. This takes the guess work out of the numbers for the separating couple; which in turn reduces the fear about their financial future. This has proven time and time again to be a very effective tool when resolving financial issues that are long term in nature. Examples of these are investments, debt reduction, purchase and sale of homes, retirement planning, and post-secondary education costs for children.

4. Analyze and discuss the financial ramifications of alternative settlement options. An example of this is tax consequences of their financial decisions. Clients need to know how their decisions can affect their tax situation as well as their access to government benefits.

5. Financial Mediation. A financial professional trained in Family Mediation is able to mediate all or some of the financial issues with the clients.

So it seems that a Financial Professional can be more than a number cruncher when asked to work on a collaborative file. Their toolbox is full of many tools that are essential to resolving financial conflicts that come up in the separation and divorce arena.

Bronwen Bruch, BMath, CMA, FDS

Category Archive: Financial Divorce Specialist