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!
By Attorney Kelly Jesson
While surfing through social media, have you ever seen someone post a photo or video set to music and add the caption “I do not own the rights to this music”? We assume people are doing this in hopes of getting around copyright laws. We assume they think that, by disclaiming ownership, they won’t get in trouble, but that is incorrect.
A copyright protects an original work of authorship, whether in writing, video, or audio form. A person infringes on a copyright if the person uses the work without permission, even if they put out a notice that they don’t own the music. To be clear, simply using the work is infringement; not pretending you created it.
A copyright owner can seek damages if you use its work without permission. There is a narrow exception called “fair use,” but it only applies when people use a work for criticism, comment, news reporting, teaching, scholarship, and research. Most social media posts are not going to fit into this category.
Also, taking a picture from someone else’s website or social media and sharing it yourself is also copyright infringement. You may have heard of celebrities getting sued for posting pictures of themselves that someone else took.
Bottom line: If you didn’t create it, don’t post it without permission. If you have any questions about getting a federal copyright for your original work, please give Jesson & Rains a call!
By Associate Attorney Danielle Nodar
After creating your estate plan, you should review your documents after a major life event such as marriage, divorce, births, deaths, or moving to a new state. While most properly drafted estate planning documents are still valid after moving to a new state due to the Full Faith and Credit Clause of the U.S. Constitution, which says that the states must recognize the legislative acts, public records, and judicial states of the other states within the U.S., there may be some state-specific requirements that could impact how the will is interpreted and the difficulty of the overall probate process in the new state.
For example, most states require that the testator, the signer of the will, sign his or her will before witnesses who must also sign the document. The rules between the states vary as to who can serve as a witness and how many witnesses are needed in order for the will be to be valid. Also, some states require that the signatures of the testator and witnesses be notarized. While North Carolina does not require a will to be notarized, having a notary validate the signatures of the testator and witnesses makes the will “self-proving,” which makes the probate process easier because the court can accept the will without contacting the witnesses who signed it first. For people with out-of-state wills, tracking down witnesses could be difficult.
Another important consideration when moving to a new state is whether your chosen executor can or wants to serve in your new state. For example, North Carolina requires that all personal representatives who reside out of state post a bond, with the amount of the bond based on the value of the probate assets. The bond requirement can be waived in a will for any North Carolina resident executors, but it cannot be done for executors residing outside of the state. In order to obtain the bond, the executor will need to locate a surety company, pay a bond premium, and pass a credit check. Additionally, an out-of-state executor must appoint a resident agent residing in North Carolina to accept all legal documents for the estate. This typically results in the executor hiring a probate attorney to serve in this role. The entire bond/resident agent process can be avoided altogether if the executor resides in state and the will expressly waives the bond requirement. For people without friends or family in the state, there is also the option of creating an estate plan that avoids probate altogether through the use of a revocable trust.
Finally, different states have different requirements for witnessing and notarizing durable powers of attorney, healthcare powers of attorney, and living wills. These are documents that third parties would be reviewing and analyzing in the event of an emergency. Even though the documents may be valid under the Full Faith and Credit Clause, you don’t want to risk having your agents have to argue the validity of the document during an emergency. We often recommend that our clients update these documents to conform with North Carolina procedural requirements.
These kinds of small but significant differences in state law that could impact whether your estate plan needs to be revised when moving to a new state. Please call Jesson & Rains if you need to determine that your existing estate plan still works based on your new location and to ensure that it may not be unnecessarily difficult for your loved ones to probate your will in North Carolina.
By Attorney Edward Jesson
In most counties in North Carolina (if not all), every case filed in District or Superior Court there will require some form of mandatory alternative dispute resolution (“ADR”). Generally speaking, if a case is filed in District Court the alternative dispute resolution method will be arbitration. If a case is filed in Superior Court, the alternative dispute resolution method will be mediation. Further, many contracts contain provisions that provide if a dispute arises the aggrieved party must submit their claim to arbitration instead of or before filing a lawsuit.
A third-party neutral person (the mediator) is selected by the parties involved in the dispute, or, if the parties cannot reach an agreement, appointed by the Court. Generally, the mediator will be a local attorney selected by the parties for his or her expertise in the law that is in dispute. While participation in court ordered mediation is mandatory, the nature of mediation means that the mediator cannot force the parties to resolve their dispute, the mediator can only make his or her best effort to get the parties to compromise. Most of the time, the parties will each have the opportunity to give an opening statement and discuss the case together in the same room. Then the parties will move into separate rooms and the mediator will go room to room, discussing the strengths and weaknesses of each party’s case trying to broker a deal to settle the dispute. If the parties come to an agreement, that agreement is reduced to writing and will typically be enforceable by the court. However, if the parties cannot come to an agreement, the mediator cannot force the parties to settle. The mediator is only there to facilitate a negotiation as opposed to being there to decide the case.
In contrast, the arbitrator is there to decide the case. The arbitrator will decide which party is entitled to relief and what that relief is based on the claims presented. The arbitrator, in effect, gets to act like a privately hired judge and jury in deciding points of law and factual issues based on witness testimony. In North Carolina District Court, the parties are ordered to an early arbitration which is limited in time to one hour. At the end of that hour, the arbitrator (who is appointed by the court from a panel) decides who “wins” the case. It is important to note that in mandatory district court arbitration, if one party disagrees with the decision (which almost always happens), that party can appeal the arbitrator’s decision, and the parties will simply continue with the litigation process.
That is in stark contrast to voluntary arbitration: In voluntary arbitration, the arbitrator (again, selected by the parties for his or her expertise in law being contested) is permitted to make a final decision, and, absent a very limited set of exceptions, the arbitrator’s decision is final and can generally be enforced by the court if need be. Often, contractual arbitration is governed by the American Arbitration Association (“AAA”). AAA has a certain set of rules and requires the parties to select arbitrators from certain “panels.” While one advantage of arbitration is often said to be that it is more cost effective than litigation, that is not always the case, especially if you get involved with three arbitrator panels from the AAA or for particularly complex cases.
Like most things involving disputes and dispute resolution, there is no “one size fits all” approach. If you, your business, or someone you know, is involved in a legal dispute, it is best to seek counsel of an attorney that has experience dealing with that specific type of dispute. As always, the attorneys at Jesson & Rains, PLLC are ready and willing to help!
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