• Hiring

• Marketing

These are the two worst areas to look for bargains. Why? Because in these areas especially, “bargains” end up costing us more in the long run. There’s a reason for the bargain, and it’s usually lack of performance and incompetence.

In prioritizing your business spending, you need to make a fundamental decision: do you want A-players on an A-team or not? A-players and A-vendors cost more initially, but they give you competence, performance, and reliability, enabling you to acquire the clients and achieve the growth you want for your firm.

Once you make the decision to have A-players on an A-team, your first step is to determine whether or not you have the financing to build the kind of practice you want. You might have to take a step back, retrench, and staff up with the highest level of staff you can afford; you might also have to make a commitment to not cut corners on marketing and equipment.

Taking these steps, along with making a commitment concerning what percentage of your profit you’re putting into marketing to clients, will enable you to reach the vision you have for an A-level practice.

Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

If you have a LinkedIn account, here are a few tips for increasing the effectiveness of your presence:

1. Pay attention to the “People You May Know” box on your LinkedIn homepage. This can be a valuable resource for expanding your connections.
2. Use the Answers section to build your visibility on LinkedIn, and to establish yourself as an expert. You can find the Answers section by clicking on “More” at the top of your homepage. You can also use the section to get input from other members and build your connections by asking questions.
3. Don’t be afraid to ask for recommendations. A great way to do this is to not only ask for the recommendation, but offer to write it yourself. This takes the pressure off your contact, while at the same time allowing you to control the image of you that’s being projected.
4. Take advantage of the “Export Connections” feature to send all the information about your LinkedIn connections to your address book. You can do this by going to your Connections page and scrolling to the bottom, where you’ll find the “Export Connections” icon. Doing this allows you to organize all of your contacts in one place, so they’re easy to find and stay in touch with.
5. Don’t overlook the Learning Center (under “More” on your homepage). It has a wealth of information about LinkedIn’s features and how to use them. It also has a New User guide to help you get started if you’re new to the site.

If you haven’t already, it’s worth the time to explore LinkedIn for yourself, and take advantage of the opportunity it gives you to make valuable connections.

Robert Armstrong
President & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

So, a tension arises between fully funding a bypass trust to get the maximum estate tax benefit and taking full advantage of the spousal additional basis by allocating assets to the marital share. Which is the better course of action? It depends on the circumstances.

Take, for instance, an estate where the husband has died leaving assets valued at $5 million with a basis of $700,000. Let’s look at two possible scenarios:

In scenario one, it’s not likely that the wife will have a taxable estate and she’s planning to sell the assets in the near future. Under these circumstances, income tax goals move to the forefront, and the better choice is probably to allocate the assets to the marital share to take full advantage of the wife’s $3 million in additional basis. By allocating the assets to the marital share, the basis of the assets can be raised from $700,000 to $5 million. ($700,000 + $1.3 million additional basis + $3.0 million spousal additional basis)

Contrast this with scenario two, in which the wife is expected to have a taxable estate, and her plan is to hold on to the assets long-term. In this situation, the primary goal becomes estate tax avoidance, so the better choice is to allocate the assets to the bypass trust, minimizing the wife’s taxable estate.

The tension between fully funding the bypass trust and fully utilizing the spousal additional basis can only be resolved by taking a close look at the facts and determining which goal, minimizing estate tax or reducing income tax, takes priority. If the survivor’s estate is likely taxable, with rates up to 55%, the estate tax considerations will likely take priority.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

The Hiring Incentives to Restore Employment (HIRE) Act, which was signed into law in March, gives employers “an incentive to hire new workers as soon as possible because the payroll tax exemption expires at the end of 2010,” said Alan Krueger, the Treasury Department’s chief economist.

Employers appear to be taking advantage of the tax incentives.  From February through June, employers hired 5.6 million workers who had been unemployed for 60 days or longer, according to an update from the U.S. Treasury Department.   Sen. Chuck Schumer, D-NY, has stated that the program is showing early signs of success, and has said he will push Congress to extend the HIRE Act for another six months.

Linda Winlock is the owner and President of Personnel Profiling Inc. Established in 1987, Personnel Profiling provides organization development, employment assessments and human resource services to companies throughout the nation. Linda has over 20 years of experience working with all types of industries and company sizes. In addition, she is an Area Director for Profiles International. Profiles International provides employment assessments and services to over 40,000 clients in 122 countries. Linda’s formal education includes a Master’s Degree in Education with a concentration in counseling psychology. She is available for phone consultation at (502)895-9297 or by email at lwinlock@personnelprofiling.com and www.personnelprofiling.com.

Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

As the owner of your firm, you’re the leader. This means being the person with the plan and being the person who takes charge of executing the plan. Most of the time, you’re more work horse than show horse. It’s your job to set the other people in your office up for success and, when things don’t go so well, you get to take the blame.

Getting your firm where you want it to be begins with making sure your firm has employees in place who are the right people for the job and who are well-trained. Can you be assured that everything you need them to take care of will be done properly so that your clients consistently receive the highest level of service? If not, what steps do you need to take to get your team to this level?

Once you have a great team in place, it’s your job to figure out what motivates you and how to continually motivate the others on your team. Your skills as a leader will be something that you’ll constantly re-evaluate and hone as your firm grows.

The time and energy you devote to planning for your business and executing on those plans are one of the keys to your success.

Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

A common estate planning strategy is for the predeceasing spouse to leave the most assets possible in a bypass trust for the use of the surviving spouse and children, and avoid taxation at the surviving spouse’s death. Thus, in 2009, the typical plan would leave $3.5 million to the bypass trust and the remainder to the surviving spouse. However, several states have passed legislation that overrides these estate plans if enacted prior to 2010. In these states, 2009 law is applied to someone dying in 2010. Maryland is one such state.

Take, for example, Bob and Mary, a couple who reside in Maryland and who have a net worth of $100 million, all of which is Bob’s property. Bob passes away in 2010. Since Maryland law applies 2009 law to Bob’s estate plan, the greatest amount that can pass tax-free to a bypass trust is $3.5 million, with $96.5 million passing outright to Mary. This $96.5 will be taxed in Mary’s estate if Mary dies in 2011 or later, resulting in a potential multi-million dollar tax bill.

Contrast this with the situation of Bill and Jane, a couple who live just across the state line in Delaware (which has not enacted an override provision), and who also have a net worth of $100 million, all owned by Bill. Bill also passes away this year. Since Bill’s estate is not subject to a state law override, the entire $100 million of Bill’s assets can be transferred into a bypass trust for Jane’s use. The result is that the $100 million Bill leaves will be free from tax at the time of Jane’s death, regardless of the year in which she passes away. A stark contrast, isn’t it?

What alternative does Bob have to avoid this result? He could move to a state like Delaware that does not have the override law. However, there is a simpler method. He can restate his estate plan in 2010. The state override laws only override plans that were drafted prior to 2010. So, by restating the plan in 2010, the override law would become inapplicable. The result: if Bob dies in 2010, the $96.5 million would not get thrown into Mary’s taxable estate at her later death. Under current law, if Mary dies after 2010 with a taxable estate of $96.5 million, her estate would incur a tax of $52,729,200. Thus, by restating his estate, Bob will save his children more than $52 million in taxes on their mother’s estate! Whatever fee Bob’s estate planning attorney charges, it’ll be a bargain for Bob and his family.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd., Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

In a previous post I talked about the state of the economy and its effect on the legal services industry, particularly job losses for large firm attorneys. But elder law attorneys are suffering a double-whammy. Not only is the recession having an impact, there’s also competition from online services offering cut-rate, do-it-yourself wills and trusts.

According to a recent ElderLawAnswers survey, elder law attorneys have been taking drastic measures to keep their firms afloat. Lawyers have been cutting bonuses and salaries and laying off support staff, with some even finding it necessary to let go of associates.

Others are shifting or expanding the focus of their practice according to the needs of their clients, with estate administration, guardianship and conservatorship, and crisis Medicaid planning being top choices.

Aside from cutting costs, you need to keep the clients you have and bring in new clients. What else can be done to make sure your firm does not buckle under the financial stress?

1. Keep focused on your clients. Your existing clients are an important source of revenue and they’re your absolute best source for referrals. They deserve your attention.

   It’s essential to remember that you’re not just in the business of selling a product or a service, you’re in the business of forming lifelong relationships with your clients. Only when you really focus on finding out what your clients’ needs are, and delivering what they need, can you provide top-notch service.

   Simply doing things like regularly returning phone calls and keeping your clients updated on what you’re doing for them will set you apart from most peoples’ image of an average lawyer. If you want to really set yourself apart from the other estate planning firms in your area, though, you’ll have to go a step or two further and put yourself in your clients’ shoes to see how you can enhance their experience with your firm. You may event want to ask your clients, in the form of a survey, what they like about your firm and how they think you can improve.

2. Deliver results as efficiently as possible. In order to be truly successful at delivering on your promises to clients, you need to have systems in place to ensure that client information is easily accessible to everyone who needs it; there’s a system for drafting documents, tracking them, and sending them to clients for review; and that your clients are informed of what’s going on with their file every step of the way. Having these systems in place not only increases client satisfaction, it also helps you avoid costly mistakes. Maximizing the efficiency of your office can help you save on payroll, too.

How has the recession affected your practice? What are you doing to survive?

Robert Armstrong
President & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

When you don’t screen your clients, you not only increase your odds of not being paid, you also run the risk of facing malpractice claims down the road, and of just plain having a miserable experience representing certain people.

Remember that you have the right and responsibility to investigate carefully before you accept a new client. This process starts at the initial consultation; pay attention to a potential client’s demeanor. Does he or she come across as irritable, vindictive, difficult? These are the personality traits you’ll be dealing with as you work with this person. If your gut instinct tells you this isn’t someone you want to work with, don’t hesitate to decline to represent them. If you want to do some additional investigation, you can use websites like www.411.com and www.usinformationsearch.com to discover information about a potential client’s background.

It’s also important, as you search for new business, not to neglect the clients you already have. Don’t forget that existing clients can be a significant source of new business, as well as being a goldmine in terms of referrals. Give them top-notch service, and they’ll not only reward you with repeat business, they’ll encourage their friends and family to use your services, too.

If you’re too busy looking for new clients, you run the risk lowering the level of service for the clients you already have, resulting in dissatisfaction and potential malpractice claims. Now more than ever, it’s imperative that you remain in communication with clients – updating them regularly, and in writing, on what you’re doing on their behalf.

Extricating yourself from a bad situation is much more difficult, and costly, than avoiding the situation in the first place.

Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

Tax Brackets

EGTRRA created six tax brackets: 10%, 15%, 25%, 28%, 33%, and 33%. If the Act is allowed to sunset, then pre-2001 tax brackets would go back into effect. What this means is that the 10% bracket would be eliminated. These taxpayers would be absorbed into the 15% bracket, and the “new” tax brackets would be 28%, 31%, 36%, and, for those married taxpayers filing jointly and earning more than $382,650, the tax rate would be 39.6%.

Capital Gains and Qualified Dividends

Since 2001, both capital gains and qualified dividends have been taxed at a maximum rate of 15%. If the sunset provisions are allowed to take effect, then the long-term capital gains rate would go back to 20%. Qualified dividends would be taxed at the taxpayer’s regular tax rate which, in 2011, could be as high as 39.6%.

Other Items

Beginning next year, expensing limits are scheduled to drop dramatically. Currently, the expensing limit is $250,000. In 2011, this would drop to $25,000.

EGTRRA doubled the Child Tax Credit to $1,000 per child and relaxed the eligibility standards. In 2011, the Child Tax Credit is scheduled to revert back to $500.

Under EGTRRA, employers who provide child care as a benefit to their employees are entitled to a tax credit which would be eliminated if EGTRRA is allowed to sunset.

Will Congress act or not? Nobody really knows. However, it seems unlikely that we’ll have a resolution on the income or estate tax provisions prior to the federal mid-term elections.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com

Think about the dominant estate planning firm in your market. If it’s not yours, then the truth is, you’re fighting for scraps. If you want to become the dominant firm in your market, you need to re-think your methods for getting and dealing with clients. The first step is to stop following the crowd. It doesn’t matter what the other firms in your community are doing, because in all likelihood, it’s not working for them. Following tradition is what lawyers tend to do, and most lawyers are mediocre at best when it comes to managing their practices.

If you’re going to be the leader in your market, you have to be willing to stand out. You also have to be willing to stop worrying about what other lawyers think about you and your practice. After all, you’re not practicing law for them; you’re practicing law for yourself and your clients.

In order to dominate your market, you need to set yourself apart in terms of the way you obtain and deal with clients. There are lots of ways to do this, but one of the most effective is creative marketing of your practice. Lawyers have been allowed to advertise for decades now, but it amazes me how many of us are still resistant to the idea.

You might offer the best legal services in the world, but if potential clients never hear of you, then your firm won’t be a success. So, what’s involved in effectively marketing your firm? The first thing we at the Academy suggest is to stop throwing money into Yellow Pages ads. Everyone seems to have one of these ads, and it’s incredibly difficult to stand out if you’re stuck in the middle of page upon page of other firms’ ads. Your money is better spent elsewhere. We’re big believers in direct response marketing, as well as online marketing… including using social media to connect with referral sources and prospective clients.

What have you found to be the best way to connect with prospective clients? We talked about this and other ways to establish dominance as part of our teleseminar for non-member attorneys on August 10, 2010. If you’d like to request the recording, go to www.aaepa.com/recording.

Robert Armstrong
President & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Road, Suite 240
San Diego, CA 92124
(858) 453-2128
www.aaepa.com