The Importance of Courtroom Demeanor When Testifying

It was a bit unnerving to me when I looked over at the jury and saw two of the jury members dozing.

This actually happened to me early in my career providing litigation support services as a CPA expert witness.  As a former police officer and detective on the Tucson, Arizona Police Department I had testified at criminal trials many times.  I never noticed any jury members dozing then – maybe because the cases were a bit more scintillating than those concerning accounting-related issues. 

By the time I started testifying at trials involving civil litigation I thought I was pretty used to the process and would never be so dull as to actually have folks go to sleep as I testified.  I decided that I had to do more to keep the jury involved – and interested, in what I had to say on the witness stand.

 I made a mental checklist that I try to adhere to before and during every trial where I am to testify as an expert CPA witness:   Before trial – a) study my files well before going into court; b) meet with the attorney on my case prior to the trial;  At trial -  a) dress in a professional manner expected of someone testifying at my level of education and experience; b) don’t argue with the opposing attorney; c) don’t go off on tangents talking about issues not asked by the questioning attorney; d) don’t lose my temper; e) be respectful of my questioner no matter how inept he or she tries to make me look to the jury; f) be thoughtful about each question asked of me, but don’t allow too much time to lapse before I answer; g) be a good teacher and  try not to talk over the heads of the jury members with a lot of technical jargon – or, conversely not to talk too far below their intelligence level;  and, h) provide eye contact to the jury members while testifying at a jury trial, or to the judge if I’m testifying at a bench trial.

I found that eye contact was extremely important – whether looking at jury members when I testified or to the judge if no jury was involved.  I challenged myself to speak with an energy and enthusiasm that would be so riveting no jury member would slumber during my testimony.  As I look at the jury I try to imagine myself in a casual one-on-one conversation with them while sitting at my kitchen table.   I’m not saying I’ve never put a jury member to sleep since.  However, I like to think I am now more engaging with the jury, or judge, than I was before.

Don R. Bays, CPA/ABV, CVA, CFF

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Legislation Governing Lifetime Gift & Estate Tax Exclusions has Changed Seven Times in Last Ten Years

Although The Tax Relief Act of 2012 provides permanent lifetime gift and estate exclusions of $5.25 million, legislation governing exclusions has changed seven times in the last ten years. Consequently, persons with sizeable estates who did not take advantage of their entire exclusion prior to December 31, 2012 should sit down with their professional advisors in 2013.

Below are a few estate planning tools and strategies presently being recommended by estate planners, accountants, and financial planners.

1. Incorporating a protection provision in your trust documents which facilitates amendments to comply with any type of new legislation in the future.

2. Lock in the “Dynasty” planning options in your trust documents that enable wealth to be insulated from taxes and other hazards over multiple generations.  Non-tax issues like divorce, substance abuse, litigation, medical disasters, and business failure destroy as much wealth as taxes.

3. Be aware and prepared should legislators adopt devices to increase taxes in order to avoid bankruptcy of the U.S. such as:

~Phasing out more exemptions;
~Implementing means testing for retirement plan withdrawals;
~Placing caps on deductions such as charitable giving;
~Limiting the duration of grantor retained annuity trusts;
~Limiting the number of years a trust can skip generations without transfer taxes;
~Implementing carry-forward cost basis at death enabling the IRS to collect more  capital gains taxes;
~Eliminating grantor status for trusts resulting in taxes at the higher trust rate;
~Including “grantor trusts” in the taxable estate which would make many life insurance trusts taxable; and
~Eliminating installment payments of estate taxes. 

4. Make sure you confer with all of your professional advisors before amending your estate planning documents.  Too many so-called estate plans leave gaps in the protection because there is little or no connection between the business and property structures and the estate structures, or because the accounting, legal, investment and insurance advisers are each doing their own thing without coordinating with each other.  Effective planning is a team event that covers the whole field for the entire game.  One star player making one good shot may look good for the moment, but it won’t win the game.  Don’t ever forget that you are the quarterback regardless of your level of knowledge.  Keep your advisors in the game.

Gary Ringel, CGREA

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Will 2013 Population Growth in Metro Phoenix Once Again Ignite Our Local Economy?

Last Friday Forbes ranked the Phoenix-Mesa-Glendale Metro area (“Phoenix Metro Area”) as the 8th fastest growing large city in the nation, behind Austin, Houston, Dallas, Raleigh, Salt Lake City, Seattle and Provo.  Although population growth was only 1.0% in 2012, it is expected to increase 2.7% in 2013.  As a frame of reference, Maricopa County’s population grew 24.2% between 2000 and 2010 reflecting an increase of 2.4% per annum.

A recent article written by Bruce Hilby, who has purchased and developed land in the West Valley over the last 35 years, stated “Metro Phoenix’s 2.7% population growth projected for 2013 is the fourth highest of any city in the nation. This is the primary driver of housing demand and if true, it suggests to me that we are not currently building nearly enough housing in the area to cope with the influx. The Phoenix Metro Area had a population of 4,192,887 in the 2010 Census. 2.7% growth represents more than 113,000 people who would typically require more than 43,000 homes.

To put this in perspective, in 2012 developers sold fewer than 10,000 new homes (single family & condo) in Maricopa and Pinal counties. Even though this was a 34% increase over 2011 and growth is expected in 2013, the Forbes projection implies a significant housing shortage.”

Is the Phoenix Metro Area poised for an economic recovery? 

I believe the answer is yes.  Historically housing shortages caused by population growth have led us, the Metro Phoenix Area, out of recessions because each new home built creates an average of three jobs for a year and generates about $90,000 in tax revenue.  Let’s hope that Forbes’ projections are accurate.

Gary Ringel, CGREA

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2012 Was A Better Year For the Metro Phoenix Retail Market!

1.9 Million Square Feet of Positive Absorption in 2012 Compared to Negative Absorption of 152,647 in 2011

Metro Phoenix Vacancy and Lease Rates


 

The Metro Phoenix retail market has recorded positive absorption in five of the last six quarters.  At year end, the market absorbed 1.9 million square feet of space compared to negative absorption of 152,647 square feet at the end 2011.  

Retail centers under construction in metropolitan Phoenix total 463,775 square feet compared to 395,281 in the fourth quarter of 2011.

At the end of the fourth quarter the metropolitan Phoenix retail vacancy rate was at 11.0 percent, compared to 12.2 percent one year ago.  As frame of reference, the vacancy rate in year end 2008 was 7.5 percent reflecting an increase of 450 basis points.

The average net asking lease rate for existing retail centers in metropolitan Phoenix at the end of the fourth quarter was $15.83 per square foot, compared to $15.90 per square foot at year-end 2011 and $15.53 two years ago. The submarkets with the highest average asking rates were Paradise Valley and North Scottsdale and Tempe/Ahwatukee which posted respective rates of $21.94, $19.13 and $18.53 per square foot in the fourth quarter and the submarkets with the lowest asking rental rates were Northwest Phoenix, North Phoenix and Mesa/Chandler/Gilbert which had average asking lease rates between $12.34 and $14.19 per square foot.

At the end of the fourth quarter, the average net asking rates for existing space in power centers, neighborhood centers, community centers and strip centers were $18.67, $14.72, $16.24, and $13.19. per square foot. We believe the retail market, with the exception certain submarkets, has reached bottom. 

Gary Ringel, CGREA

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Trust but Verify

Ronald Reagan used to say “trust but verify.”  He used the phrase frequently when referring to U.S. relations with the Soviet Union but it can be applicable to the business world as well.  Business owners and managers need to put a certain amount of trust in their employees.  That doesn’t mean blind trust without verification and controls.  It means trusting that they will do the jobs they were hired to do in an appropriate and professional manner.  It also means having proper controls in place to verify that they are not doing something that could hurt the business. 

Small business owners and management in small non-profit organizations often feel that their employees would never steal from them.  Some owners don’t think they have enough worth stealing.  Some develop a sense of family with their employees resulting in a higher level of trust.  Others just don’t think they have the time or resources to invest in the controls to prevent fraud.  What they fail to see is that any amount of theft can be detrimental to a business or organization. 

It doesn’t have to cost a lot to deter fraud.  Owners and managers should recognize where the risks exist in their organizations.  Then they should consider the best approach to mitigate those risks.  Pre-employment screening for personnel in higher risk positions could be implemented.  Mandatory vacations or job sharing are low cost options.  A practice of having bank statements mailed to the owners home address for his/her review monthly doesn’t take a lot of time but could prevent someone from diverting funds.

Owners and managers should not stick their heads in the sand and blindly trust their employees.  An employee who knows the likelihood of getting caught is slim is much more likely to commit a crime than one who believes the chances of getting caught are high.  The perception of detection is sometimes all that is needed to prevent an unfortunate occurrence.

For a real life case study, see my article here.

Melissa Loughlin-Sines

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