Business Banking E-Newsletter - July 2011

Questions to Ask When Drafting an Estate Plan

Because you've worked hard to create a secure and comfortable lifestyle for your family, you'll want to ensure that you have a sound financial plan that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about.

A qualified financial professional and tax professional can help ensure you are minimizing taxes and maximizing gains for your heirs. You can bring this four-part checklist to your initial meeting to
discuss how to make your plan comprehensive and up-to-date.

Part 1: Communicating Your Wishes

  • Do you have a will?
  • Are you comfortable with the executor(s) and trustee(s) you have selected?
  • Have you executed a living will or health care proxy?
  • Have you considered a living trust to avoid probate?
  • If you have a living trust, have you titled your assets in the name of the trust?

Part 2: Protecting Your Family

  • Does your will name a guardian for your children if both you and your spouse are deceased?
  • If you want to limit your spouse's flexibility regarding the inheritance, have you created a Q-TIP trust?
  • Are you sure you have the right amount and type of life insurance for survivor income, loan repayment, capital needs, and all estate settlement expenses?
  • Have you considered an irrevocable life insurance trust to exclude the insurance proceeds from being taxed as part of your estate?
  • Have you considered creating trusts for family gift giving?

Part 3: Reducing Your Taxes

  • If you are married, are you taking full advantage of the marital deduction?
  • Are you making gifts to family members that take advantage of the $13,000 annual gift tax exclusion?
  • Have you gifted assets with a strong probability of future appreciation in order to maximize future estate tax savings?
  • Have you considered charitable trusts that could provide you with both estate and income tax benefits?

Part 4: Protecting Your Business

  • Do you have a management succession plan?
  • Do you have a buy/sell agreement for your family business interests?

Because of the possibility of human or mechanical error by Financial Communications or its sources, neither Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Financial

Communications be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2011 McGraw-Hill Financial Communications. All rights reserved.

Etiquette Rules for Writing Business E-Mails

Simple tips to keep your correspondences professional

E-mail provides business professionals with an easy and fast way to exchange information electronically. As with all forms of written correspondence in the business world, e-mails must be composed and formatted professionally. Although this form of advanced communication promotes rapid messaging, not taking the time to adhere to etiquette standards can get you into hot water.

Use Subject Lines
According to Purdue University, always fill in the subject line with the topic of your e-mail. This lets recipients know what your e-mail is about and how they should prioritize reading your e-mail versus the dozens (or hundreds) of other e-mails they have to read. You must also consider that your recipient(s) may have been waiting anxiously for an e-mail from you on a particular topic, but, unless your e-mail has a subject line, they may not know to open it.
Set a Professional Tone
The tone of your e-mail should always be professional. As recommended in a June 2010 article on, do not joke around or use sarcasm, avoid trendy slang or jargon, and avoid being playful or cutesy. Adding smiley faces and other emoticons in a business e-mail is inappropriate. Even if you know the person you are sending the e-mail to, you do not know how many other people might see your e-mail.
Proper Salutations
As you would with a handwritten (or typed) letter, use proper salutations in your e-mail. Purdue University advises e-mail writers to address recipients with a warm greeting, such as "Good morning," and conclude the e-mail with "Sincerely" or "Thank you." These types of salutations keep your e-mail professional and polite.
Use Professional Fonts
The font you use in your e-mail is a reflection of you. Cartoon-looking fonts, such as fonts with squiggly or bubbly letters, make the sender come across as childish, which diminishes the professionalism of the communication. Keep fonts professional. According to Wellesley College, the best fonts to use for business purposes are Times New Roman, Arial and other book-print fonts. Additionally, refrain from changing the font so that it is in all capital letters, as this is construed in online communication as yelling.
Proofread Your E-mail
It is unprofessional to send e-mails with spelling errors, punctuation errors and other types of grammatical or technical mistakes. Such errors make it appear as though you do not possess adequate writing skills. Use the spell check feature of your e-mail program to correct misspelled words, and always proofread your composition before hitting the "Send" button.
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5 Hot Summer Marketing Tips

Ideas to help keep your business booming

Whether your small business serves the millions of vacationers that hit the nation’s parks, beaches and other vacation spots during the summer months, or you find that most of your customers head out of town, here are some tips to help keep your business booming all summer long. 

  1. Take part in summer festivals and fairs.
    Sponsoring or participating in local festivals, carnivals and fairs is not only great for your brand, but it can help introduce new and potential customers to your products and services. Start by identifying events that are the right fit for your business and have a track record of success. Local newspapers, community flyers, city or homeowner association Web sites, as well as your local Chamber of Commerce can help point you to upcoming events in your community.
  2. Take your customers out.
    It's normal in the corporate world for executives to head out on a Friday afternoon for a round of golf with their customers, why not treat your best customers just as royally? Whether you host a grill out at a local park, have a day at a winery, or charter a boat for an afternoon of fishing, your customers will surely appreciate the gesture. And remember, you can claim customer entertainment expenses (including meals) as a tax deduction (as long as there is a clear business purpose for them) and substantial business discussions are held before, during or after the entertainment. The tax deduction is generally limited to 50% of the expenses incurred.

    If you take customers to a show or sporting event (to promote business) you can deduct the cost of the ticket as an entertainment expense. If you buy them the ticket as a gift but don’t accompany them, the cost is deductible as an entertainment expense (50% limit) or as a gift (subject to the $25 maximum), whichever is more advantageous.

    And don't forget your business partners and vendors - you want to keep them happy too, so schedule some quality time with them.
  3. Take your business on the road.
    Go where the vacationers are. If you operate a food business, have you thought about taking a concession stand on the road? Whether you position it at fairs and festivals, sports events or even certain roadside locations (within the law) a concession stand can extend your customer reach, supplement your core revenues and increase your brand reach.
  4. Run a contest.
    Summer is fun after all and literally any business can run a contest, which also makes for great publicity. Brainstorm with your employees and gather up some ideas - and always try and tie the prize to something that incents people to frequent your business.

    Restaurants could run food eating contests or host cook-offs. Landscaping companies could launch a “Worst Yard” in the neighborhood contest - submit your yard and win a free landscaping makeover. Pet stores, grooming salons or veterinary hospitals could host pet shows with prizes for Best in Show.

    Whatever you do, be sure to market it correctly (and pay attention to truth in advertising laws). Use a blend of traditional (email marketing, newspaper ads, flyers) and new media (Facebook, Twitter, blogging) to get the word out, and follow-through with the results of your contest by posting pictures of the winner to Facebook or your Web site.
  5. Dress up your website.
    Last but not least, why not dress up your Website for the season. Many businesses do this for the winter holidays, but adding a summer graphic here and there can keep your Web presence seasonal and relevant.

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Simple Ways to Attack Unemployment

At his press conference after the meeting of the Federal Reserve's Open Market Committee, Fed Chairman Ben Bernanke said that employment is picking up -- at a frustratingly slow pace.

The numbers now show that the jobs problem in the U.S. isn't simply cyclical unemployment -- the kind the rises and falls with the cycles of the economy -- but also a rise in structural unemployment -- the kind that doesn't go down very much even when the economy picks up. The kind of patience that Bernanke advocates is absolutely the wrong medicine for an increase in structural unemployment.

Right now the numbers are starting to show a troubling and startling divergence: The number of job openings is rising, but the number of people working isn't climbing nearly as fast.

It looks increasingly like one "gift" from the Great Recession is a rise in the permanent unemployment rate, even in a good economy. That will mean more people out of work for the long term, with all the pain that imposes on those workers and their families. And it will mean that the U.S. economy as a whole will grow more slowly than in the past -- and than it might have without the damage inflicted by the Great Recession.

Remember 4.6% unemployment?
You know all about cyclical unemployment by now. The official unemployment rate, which doesn't include discouraged workers who have stopped looking for work or workers with part-time jobs who would like full-time employment, stood at 9.1% in May 2011. Way back in 2007, before the global financial crisis and the Great Recession, the official unemployment rate was 4.6%. In 2008, as the recession started to bite, it climbed to 5.8% and then, in 2009, it rocketed to 9.3%.

The unemployment rate follows, with some lag, the economic cycle. In 2007, the economy grew at an annual 3.2%, 2.3%, and 2.9% rate in the second, third and fourth quarters, respectively. In 2008, the annual growth rate dropped to a negative 0.7% in the first quarter, rebounded to a not-terribly-robust (but at least positive) 0.6% in the second quarter, and then fell off a cliff in the third quarter, dropping at an annual rate of 4% before finishing the year at a negative 6.8%. The next year started grimly, with the economy shrinking at a 4.9% annual rate.

But the unemployment rate hasn't dropped very much as the recovery from the Great Recession has progressed. The post-recession unemployment rate did dip briefly to 8.8% from a high above 10%, but now it seems stubbornly stuck above 9%. That's after a 5% annual growth rate in gross domestic product in the fourth quarter of 2009 and growth rates of 3.1% and 3.7% in the first and fourth quarters of 2010.

Why hasn't unemployment shrunk?
That's been a big puzzle to economists. The explanations are all over the political and economic map: The 2009 economic stimulus package was too small. Or too big. Businesses are reluctant to hire because of inconsistent or intrusive regulation. The continuing decline in housing prices has sapped consumer confidence and spending. Rising income inequality has put a huge burden on the middle class. And on and on.

Unemployment in the US
What most of these explanations share, however, is a belief that unemployment would shrink as the economic cycle shifted from recession to growth -- except that something has happened this time to interfere.

A very few voices have worried that maybe the slow recovery in job growth from the Great Recession is a sign of structural problems. And that's looking more and more likely.

For instance, in the manufacturing sector, which has led the economy during the recovery, the number of jobs has declined since January 2009, but the number of available job openings has climbed to 230,000 from 98,000. Manpower, the employment company, reports that 52% of leading U.S. companies report difficulties in hiring essential staff. In 2010, Manpower's survey showed 14% of companies reporting difficulties. McKinsey Global Institute found in a survey of 2,000 companies that 40% had positions open for at least six months because they couldn't find suitable candidates.

That data too anecdotal for you? There are very few comprehensive statistics on how many companies should be hiring but aren't. It's too subjective. How many of the companies in McKinsey's survey, for example, are using the "no suitable candidate" explanation as an excuse to avoid hiring?

But there are estimates. Harry Holzer, an economist and public policy professor at Georgetown University, estimates that the unemployment rate would be 8% instead of 9.1% if existing job openings could be filled. The International Monetary Fund estimates that 25% of U.S. unemployment is structural.

If those estimates are anywhere near right, then most of U.S. unemployment is still cyclical. And it should be attacked with the available tools for creating demand in the economy. You know what those tools are, since we've tried most of them -- not always in the best or most efficient fashion.

The Federal Reserve has tried to create demand (even for houses) by keeping interest rates low. Congress and the president have tried to create demand by spending on infrastructure, tax cuts and investment tax credits to business, to mention a few approaches.

It's quite possible that these measures haven't worked because the Great Recession was the deepest economic downturn in the U.S. since the Great Depression and that cyclical downturns, when they're deep enough, are very difficult to reverse. Certainly the duration of the Great Depression suggests that.

But it's also possible that these cyclical measures have been ineffective because they've attacked only part of the unemployment problem. If companies can't find workers with the right skills, then creating demand won't reduce unemployment very quickly. Think of this mismatch of workers' skills and job openings as yet another force slowing down job creation. If a company has to train new hires to bring their skills up to speed, it has to be 100% convinced that the state of the economy makes the expenditure worthwhile. No company is going to spend six months training a worker only to discover that the orders it was counting on haven't come in the door.

How to speed up job creation
There are ways to attack this structural unemployment problem. The federal and state governments could pay for worker training through an expansion of community college systems, grants to workers (unemployed or employed) for training or subsidies to company- or industry-run apprenticeship programs like those in Germany.

Some of the existing programs in these areas -- community college funding, for example -- have been hit hard by state and local budget cuts. And there's certainly a spirit in the land that says we can't afford such frills.

Except that these aren't frills. And they wouldn't be even if the United States wasn't trying to figure out a way to speed up job creation after the Great Recession.

If you look around the world -- and take a point of view that stretches beyond the Great Recession -- you'll see that the great economic challenge of the next decades is competing on productivity and the skills of an economy's workforce. You may not be able to escape that competition even if you're China -- rising wages and incomes in that society are pushing the cheap-labor jobs to countries such as Indonesia, Bangladesh and Vietnam. Moving up the value chain is the next game every economy will have to to play.

And the United States doesn't seem to be half-trying.

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