By Attorney Kelly Jesson
With estate planning, like many other things, cheaper is normally not better. With online, fill-in-the blank options, the question assumes you understand it and know the answer. If you do not, you could be filling it in incorrectly. One top DIY legal document company used to have a note on its website that said “80% of people do not complete online forms correctly” (trying to get people to upgrade to a “live attorney” package). Specific words have meanings, and if you do not understand the law in your state, there can be some unintended consequences when doing it yourself. For example, you could unintentionally disinherit a child. You could accidentally leave money to someone you didn’t know was included in a class of people.
Most do-it-yourself forms leave out provisions that makes things easier and less expensive to manage, like extra powers in the Durable Power of Attorney that can help your loved ones if you are incapacitated or including the power to sell real estate in a will (saving your estate thousands of dollars). You may also accidentally leave assets in the wrong hands, such as having minors inheriting property, resulting in costly court proceedings to fix. Many companies rely on documents and laws that are not always up to date or they may not be state-specific (although advertised to be), and the remedies may be expensive and require an attorney or court proceeding to fix.
Additionally, estate planning attorneys are not just document drafters. There’s a reason why it is called “estate planning” and not “will drafting.” We counsel our clients as to their choice of guardian and executors, leaving money to kids, helping ensure that ex-spouses don’t inherit, etc. We help our clients plan for death or incapacity utilizing real estate deeds, beneficiary designations on retirement and life insurance policies, and business agreements. Did you know that your will could leave everything to one person, but if you have someone else named as a beneficiary on a policy, that trumps your will? Some surviving spouses are sad to learn that they do not inherit real estate outright due to the owners on the title. We update titles for our clients if they want to, in advance. If you wait until someone has passed, it is too late.
If something goes wrong with an online legal document, you are SOL (so out of luck). Just look at LegalZoom’s terms of service: “. . . LegalZoom cannot guarantee that all of the information on the Site or Applications is completely current. The law is different from jurisdiction to jurisdiction, and may be subject to interpretation by different courts. The law is a personal matter, and no general information or legal tool like the kind LegalZoom provides can fit every circumstance. Furthermore, the legal information contained on the Site and Applications is not legal advice and is not guaranteed to be correct, complete or up-to-date. Therefore, if you need legal advice for your specific problem, or if your specific problem is too complex to be addressed by our tools, you should consult a licensed attorney in your area.” If an attorney does something wrong that results in damages, you or your family can sue them for malpractice.
Using online forms gives the drafter / purchaser a false sense of security. While they may have saved a few thousand dollars, the true price may be far greater and paid by undeserving family members. Investing in estate planning is investing in your family’s future, and who can put a price on that? If you’re ready to get your estate plan in order, give Jesson & Rains a call.
By Associate Attorney Danielle Nodar
May is Small Business Month in Charlotte! As a small business, safeguarding the confidential information that makes you stand out from the competition is important to the long-term success of the business. Non-compete agreements are common tools used by businesses to help protect this kind of confidential and proprietary business information and allow for business to hire talented employees without worrying that the employee will take your idea and implement it elsewhere. These agreements generally restrict an employee from working for a competitor until a certain period passes and protect confidential information from being used by an ex-employee. However, with companies transitioning to a remote working environment and widespread unemployment, more businesses and lawmakers are re-evaluating the scope and legality of non-compete provisions.
Non-compete agreements are controlled by state law, meaning that each state has unique provisions for what is permissible in these agreements. In North Carolina, a non-compete agreement must meet the following requirements:
With the changes in the employment landscape in the last year, there has been a growing movement to limit or even abolish the use of non-compete agreements. As more workers are forced to find new jobs, have moved to remote working environments, or move to a state outside of their employer’s home base, the question of how and when to enforce non-competes has been more present with business owners and lawmakers. As non-competes are governed by state law, it also makes it difficult for employers with employees residing in multiple states to be able to maintain enforceable agreements without careful planning. For example, some states have limited noncompete agreements to apply only to employees making over $100,000 a year, or to be valid only when a business interest is being sold.
There is also a push for the federal government to step in and put some overarching limitations on non-compete agreements that limit these agreements in cases where a narrow group of defined trade secrets are trying to be protected by a business. While it is too soon to tell if federal laws impacting non-compete provisions are on the horizon, it is important for employers to be mindful of the importance of crafting a narrowly tailored non-compete provision that works to protect their business while still allowing for fair treatment of former employees. Exploring other legal options that could be used to protect confidential business information is also crucial. If you have questions about how to best protect your business’ proprietary and confidential information, please call Jesson & Rains!
By Attorney Kelly Jesson
I am not an insurance salesperson. However, I often give my estate planning clients one common piece of advice – get life insurance if you can. This is typically easier for my younger clients, but for my older clients, the importance of having life insurance is greater.
Here’s the reason for my advice: First, life insurance passes outside of the probate estate, beyond the reach of any estate creditors (for a refresher on what is included in your “probate estate,” see this blog post). This means that your loved one will receive a check without an estate being opened or finalized and it will belong to them outright. Often, my probate clients who have lost loved ones have already received their life insurance check before they ever even come into my office to see me to probate a will or settle an estate.
This can result in a tremendous burden being lifted. While your loved one is still obviously grieving the loss, your loved one does not have to be concerned with paying funeral expenses, medical bills, or even a mortgage payment, for example. This is especially true if you do not have joint bank accounts. If an estate has to be opened and settled for your loved one to receive their inheritance, they will not get that money for at least six months (and sometimes even one year). Also, spouses are required by law to pay the funeral expenses and medical expenses of the deceased spouse. These bills can sometimes wipe out savings. Additionally, if you pass away with debt, some savings accounts and other assets are included in your probate estate. Your loved one may not inherit anything if your estate assets are needed to pay your final debts.
Many people opt to forego life insurance in exchange for passing on retirement accounts like 401Ks and IRAs. While this is certainly an option, your loved one may not have near instant access to pay your final expenses. Depending on whether your surviving spouse is your heir or your children (or someone else), there may be restrictions on the use of the funds. Importantly, life insurance is passed on tax free while your beneficiary will be responsible for paying taxes on withdraws taken from retirement accounts.
Furthermore, if you are a business owner, and especially if you are in business with a spouse, life insurance can ensure the survival of your business.
Finally, I have started recommending life insurance policies that contain long-term care riders. If there is ever a need for you to enter a long-term care facility, you can use those funds for that. I have a couple of clients who are in moderate-to-nice assisted living facilities who have told me that they would not be able to live there had they not purchased long-term care insurance years ago. People are living longer, and medical care is getting more expensive.
While some people use these products to ensure they pass along an inheritance to their loved ones, these products also alleviate stress and potential burden on your family members (whether that means at death or in the event you can no longer care for yourself). Do not hesitate to contact me if you would like to be referred to an insurance professional to find out more information. I am not being paid to promote life insurance, but I feel strongly about these products, and I believe that it is an important part of the estate planning process.
By Associate Attorney Danielle Nodar
There are numerous to-do items and deadlines business owners must keep up with in order to successfully run a business. However, many business owners forget that they must file an Annual Report with the North Carolina Secretary of State to keep their business in active and good standing with the state.
The Annual Report is used to keep the business records up to date with the Secretary of State. On the Annual Report, you will provide basic information about your business, such as the name and address of the registered agent, the principal address of the business, and the names and signatures of company officials. Most businesses formalized with the Secretary of State’s Office need to file an Annual Report, such as Business Corporations, Limited Liability Companies (LLC), Limited Liability Partnerships (LLP), and Limited Liability Limited Partnerships (LLLP). Limited Partnerships, Professional Corporations (PCs), and Professional Limited Liability Companies (PLLC’s) do not have to file an Annual Report. There is also a filing fee due with the Annual Report. For LLC’s and partnerships, the fee is $200 and for corporations, the fee is $25.
The due date for your business’s annual report depends upon the type of business, but April 15th is the deadline for most businesses. For corporations and partnerships (LLP and LLLP), the annual report is due to the Secretary of State’s Office the 15th day of the fourth month following the entity’s fiscal year’s end. For example, if your fiscal year ends on December 31, your annual report for that year is due on April 15th . All LLC’s must file the Annual Reports on April 15 each year after the date of creation.
Jesson & Rains is now offering a yearly plan for businesses that includes serving as our client’s registered agent and filing their annual report, among other things. This plan helps to ensure your privacy (if your business is ever sued, the lawsuit will be delivered to our office’s address); you will be less likely to fall victim to a scam (we will sort through and destroy junk mail); you will be more organized and have less paper (we will scan and forward your mail immediately to your attention after sorting); and we will ensure that corporate records and Secretary of State records are kept up to date.
We’re also offering an upgraded yearly plan that includes unlimited access to attorneys throughout the year. No more billing for .1 emails or .2 telephone calls. We want to encourage people to contact us anytime they need us instead of being afraid to get a bill from us.
The consequence for not filing an Annual Report and/or paying the fee is that the Secretary of State can administratively dissolve your business. This means that you will lose the liability protection you enjoy by being a formal business, and a creditor can come after your personal assets. If you have questions about filing your Annual Report or want to learn more about the new business services offered by our firm, please reach out to Jesson & Rains!
In North Carolina, a Plaintiff (the party filing a lawsuit) can seek an “Order of Attachment” in certain circumstances. Generally, this means that any property in North Carolina that the Defendant owns, including bank accounts, can be seized by the County Sheriff to satisfy any eventual judgment pending the outcome of the lawsuit. This can be problematic for several reasons: first of all, the Plaintiff may lose the case and not be awarded any damages and the property was seized unnecessarily! Also, at the beginning of a lawsuit, the number that a Plaintiff claims he or she has been damaged may not be a realistic number and is based purely on their opinion of the case. Having large sums of money seized during the pendency of a case (which could take years to settle) could cause a business to go bankrupt.
Thankfully, an attachment order will only be issued in a few circumstances. The Defendant must be:
The Plaintiff must pay a bond to the Court which must be high enough to compensate the Defendant if the Defendant prevails in the lawsuit or is damaged by an improper attachment. Obviously that bond will greatly vary and is somewhat up to the discretion of the judge who is hearing the attachment order.
Fortunately, if you have received an attachment order, you do have options to dissolve or modify the order. To dissolve the order, you must show that something was done improperly in obtaining the order (for example, that you do not fall into one of the categories of people who can have their property attached). If you are unable to make that showing, you can try to have the attachment order modified—either the amount of the attachment, the bond, the terms, or both.
Attachment orders are just one more way that lawsuits can cause problems to the people involved. If you, or someone you know, receives a summons, attachment order, or notice of garnishment, the attorneys at Jesson & Rains, PLLC are ready to assist.
By Associate Attorney Danielle Nodar
Many people associate “trust fund babies” with millions of dollars, royal babies, and celebrity kids, but with proper estate planning, anyone can leave their children a trust fund to provide for them once both parents are gone. The goal is to make sure your children’s basic needs are met, not to spoil them. By using either a revocable living trust or testamentary trust, parents can create a plan for how money will be used for their children’s care if both parents pass while a child is still too young to manage money on their own.
A trust is an agreement where the settlors, the creators of the trust, entrust money and other assets to a trustee for the trustee to hold, manage, and ultimately distribute to named beneficiaries upon the happening of some event. Without utilizing a trust, the law generally allows for any adult, meaning anyone eighteen or older, to inherit money outright, regardless of their maturity level, ability to manage finances, or the amount of money being inherited. Prior to turning eighteen, assets inherited by a child will be kept in a custodial account to be managed by a surviving parent or legal guardian. The adult in charge will manage the money for the child’s benefit and can use the funds for the child’s education, support, health, and maintenance until the child turns eighteen and inherits the remaining assets outright.
A testamentary trust or revocable living trust allows parents to name a trustee to manage any inherited assets for children until the child inherits outright according to the terms of the trust. The Trustee will be managing the estate assets and making distributions of the funds for your children’s care according to the terms of the trust. You can give the trustee a lot of discretion over what the money can be used for. They also will be able to seek professional guidance to assist them with managing funds, as part of their job requires them to make sure that the estate assets continue to accrue income while the trust is in existence. Finally, the Trustee does not have to be the same person as the person who you name as a legal guardian for your children. If you think one person would be better suited as a caregiver and another would be better at managing money, you can have both people serve in different roles and work together in making sure that your children’s needs are met.
You can control the age and conditions in which your children will inherit funds outright. You can break up the distribution into different percentages at different ages so that children are not inheriting everything in one lump sum. For example, you can have a child inherit 25% at age 22, then another 25% at age 25, and the remaining assets at 30. During this time, the Trustee will still be making distributions for a child’s health, education, and support, but the child will get additional distributions of larger sums of money as they are more capable of making financial decisions on their own. A trust also allows you to give the Trustee discretion to distribute additional funds for whatever you’d like, such as travel, weddings, and purchasing a residence. Finally, you can name either trust as a beneficiary of a life insurance policy, which would allow any money that a child was to inherit to instead flow through the trust to be administered according to the trust’s terms. Without this, a child could ultimately inherit the entire proceeds from the policy at eighteen.
As you can see, all parents, and not just those who are royalty, celebrities, or have millions of dollars in assets, can benefit from having a trust for their children’s benefit included in their estate plan, as it allows you to name a trusted adult manage funds for your children if you are no longer living, and it also allows you to implement conditions and instructions for how money will be used and ultimately distributed. If you have questions about the best option for your family, please call Jesson & Rains!
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