By Senior Associate Jeneva Vazquez
On January 1, 2024, the Corporate Transparency Act (CTA) officially took effect, introducing new reporting obligations for nearly all businesses in the United States. The legislation aims to increase transparency in corporate ownership and help combat global terrorism and money laundering. However, it also represents a significant shift for many small business owners who previously enjoyed a level of privacy in their operations. What the CTA Requires: Under the CTA, most businesses are now required to submit a report to the Financial Crimes Enforcement Network (FinCEN), detailing information about their “beneficial owners.” A beneficial owner is defined as any individual who directly or indirectly exercises substantial control over the business or owns at least 25% of the company. This includes key management roles such as LLC managers, board members, and CEOs. The CTA represents a significant shift in the regulatory landscape for small businesses. The report must include personal details for each beneficial owner, including: full legal name, date of birth, current residential address, and a copy of a government-issued ID (e.g., U.S. passport or driver’s license) For businesses formed before January 1, 2024, there is a grace period until January 1, 2025, to submit the first report. After the initial report, businesses must notify FinCEN of any changes to the reported information. Failure to comply with the CTA can result in significant penalties, including daily fines of $500 and potential criminal penalties of up to two years in prison. Who Must Comply with the CTA? The CTA applies to most entities formed or registered in the U.S., with certain exemptions for larger operating companies and nonprofit organizations already subject to extensive regulatory oversight. If your business was formed before January 1, 2024, it’s crucial to make a plan to comply with these reporting requirements by the January 1, 2025 deadline. Failure to do so could result in costly fines. How We Can Help? To help you navigate the new CTA requirements, we’ve included beneficial owner reporting as part of our Annual Business Maintenance Plan for clients. If you’re interested in having us handle the reporting for you, the deadline to sign up is November 25, 2024. We will not only submit the initial report but can also assist with filing any amendments for as long as you remain a member. The Annual Business Maintenance Plan includes quarterly telephone calls, us filing your annual report with the Secretary of State, a discount on future legal services, and other things that you can see HERE. It’s essential to understand these new obligations and ensure timely compliance to avoid penalties. If you need assistance filing your beneficial owner information before the reporting deadline, please contact us before November 25, 2024.
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By Attorney Kelly Jesson
National Estate Planning Awareness Week was adopted in 2008 to help the public understand what estate planning is and why it is important for all people, not just the uber-rich. An “estate” does not necessarily mean something like the Biltmore Estate. Everyone has an estate, even small or insolvent estates. Estate planning is more than money – estate planning allows you to gain control and peace of mind over difficult and unpredictable situations. We have previously written about the difficulties caused by dying without a will in North Carolina and the pitfalls of the probate process in North Carolina; however, many of the “worst-case” scenarios can be avoided with proper planning. Let us help you plan for emergency scenarios and protect your business and personal assets for the benefit of your loved ones through estate planning. Estate planning allows you to plan for what happens when you pass away, including naming a trusted person to handle your final affairs, name guardians for minor children, and distribute your assets according to your wishes. In addition to planning for death, our office drafts durable and health care powers of attorneys, where you can name agents to make both financial and medical decisions for you if you are incapacitated and cannot communicate. There is no reason to wait to do planning, and as we age and the pandemic continues to be a part of our “new normal,” you should get a plan in place before it is ever needed. If you do become incapacitated or ill, it may be more difficult or impossible to get documents in place, as you must have testamentary capacity to create valid estate planning documents. Some of our clients delay estate planning because they do not have any friends or family members they trust to serve in fiduciary roles. In some circumstances, members of the firm may serve in these roles for the client if the client feels comfortable. It is better for you to take control and name someone yourself than to have the government appoint someone in an emergency or when you pass away. National Estate Planning Awareness Week is a great time for you to take CONTROL! Please call Jesson & Rains if you have questions about getting your estate plan in order or updating an existing estate plan. While You Build, We Protect. By Associate Attorney Heather McKaig
Holding companies are having a resurgence in popularity recently. Interest, as represented by Google searches, has steadily grown and experienced a marked increase in the past eighteen months. A holding company is a parent company, usually a corporation or LLC, that owns or controls other companies. Some holding companies are created just to own property, such as real estate, intellectual property, or stocks. Unfortunately, holding companies and their structure can be misused by those attempting to conceal information about the nature of their businesses in multiple tiers of management or by the holding company itself exerting overreaching control and making unreasonable demands of its subsidiaries. Most business owners who express interest in holding companies cite liability protection and loss protection as their primary purposes for having one. However, like other corporate entities, the liability protections of holding companies can be disregarded by courts in favor of creditors if the companies are not formed, owned and managed correctly. Holding companies are not the only means to protect assets from creditors. Both corporations and LLCs provide protection of an individual’s assets from business creditors. And having properly organized, separate LLCs or corporations keeps creditors of one business from reaching the assets of another business. Holding companies are subject to the same formation, reporting, and maintenance requirements and fee schedules as other companies. Each subsidiary within the holding company must also keep up with its own corporate governance in addition to its day-to-day management. Adding the holding company framework creates more work for the business owner in filing and compliance, not only upon formation, but also with regular reporting each year. More tiers of reporting and compliance brings unnecessary expense and added risk of a missed deadline or annual report. Therefore, the holding company framework is sometimes more trouble than it is worth. If you are interested in having a discussion about what business structure is right for you, please give Jesson & Rains a call! By Senior Associate Jeneva Vazquez
We’re thrilled to announce that our firm will be presenting and hosting a table at the National Association of Insurance and Financial Advisors (NAIFA) South Carolina's 2024 State Conference, taking place in Greenville, SC, at the end of the month. During this seminar, we’ll explore key insights for effective collaboration with insurance and financial professional service providers. Our discussion will focus on identifying legal planning opportunities for advisors and dispelling common legal misconceptions. Here’s a sneak peek at some of the topics we’ll cover in our presentation: Trusts: Not Just for the Wealthy One of the biggest myths we encounter is that trusts are only for extremely wealthy individuals. There’s no specific wealth threshold that necessitates a trust. In fact, a revocable living trust is a practical tool for families of all sizes. Trusts allow for quicker access to assets upon death or incapacity, enhance privacy, and can protect assets for children or other beneficiaries. Moreover, trusts can help eliminate the need for court involvement upon your death or if you become incapacitated, saving time, money, and stress. Trusts are particularly beneficial for clients with:
The Limitations of Beneficiary Designations While beneficiary designations are an important mechanism for transferring assets, they aren’t a one-size-fits-all solution. Special considerations should be made for:
The Importance of Collaborative Strategies We believe in the power of collaboration with financial and insurance advisors to create cohesive and effective estate planning strategies. By integrating insights from various professionals, we help clients develop robust estate plans tailored to their unique situations. Our firm stands apart by offering full-service solutions, including individual asset analysis and transfer recommendations through our Family Wealth Inventory process, comprehensive trust funding services, and support in communicating with other trusted insurance and financial advisors. We want our clients to have estate plans that truly serve their loved ones when they need them most. A comprehensive approach to modifying assets for intended transfer is essential to achieving this goal, which happens more efficiently through collaboration with other professional advisors. If you’d like to learn more about our collaborative and comprehensive approach to estate planning, or how we can work alongside your other trusted advisors, schedule an introductory call to get started! By Attorney Kelly Jesson
We previously reported back in April that the Federal Trade Commission (“FTC”) banned non-compete agreements effective September 4. Almost immediately, the rule was challenged in many courts. Earlier this week, a federal judge in Dallas struck down the ban across the entire nation, holding that it was “unreasonably overbroad” and the FTC lacked the authority to enact the rule. Therefore, local business owners can continue to utilize non-compete agreements to protect their proprietary information when an employee with insider knowledge leaves to work elsewhere. However, our courts will not enforce a non-compete agreement that is not narrowly tailored in scope and geographical area to accomplish that goal, so business owners should seek the assistance of an attorney when putting these in place. If you have any questions, or need assistance with an employment agreement, please give Jesson & Rains a call! By Senior Associate Jeneva Vazquez
For parents, ensuring the protection of minor children in the event of unforeseen circumstances is often a key motivation for considering estate planning. After years of putting off the task of naming guardians in a will, we frequently receive urgent calls from parents preparing to leave their kids with a caretaker for a weekend getaway, riddled with fear about “what would happen to the kids” if something happens to them. While naming long-term guardians in a will is crucial, it is often insufficient to fully safeguard your children if something happens to you. To eliminate any gaps in your child’s care plan, we offer comprehensive services that go beyond naming guardians in a will. Our goal is to reduce the possibility that your children will ever be taken into state custody (even for a short time) and to ensure your children are raised by the people you select according to your wishes. Our protection plan for minors covers every detail: Temporary Standby Guardian Appointment: Legally appoint trusted individuals who can quickly respond to your children, ensuring they are never placed in state custody if something happens to you. This is especially critical if your long-term guardians are not within 20 minutes of your child. Instructions to Caregivers: We provide an emergency response plan for babysitters, your child’s school, or any caretaker, detailing exactly what to do in case of an emergency. This directs your children to be placed with legally appointed Temporary Standby Guardians, reducing the risk that your children will ever wind up in state custody. Emergency ID Cards: ID cards for your wallet inform first responders that you have minor children and provide contact information to ensure your children are always in the care of those you have selected. Exclusion of Guardian: Clearly specify individuals whom you would never want to raise your children under any circumstance. Power of Attorney and Medical Power of Attorney: Appoint someone you trust to make important decisions or provide medical authorizations for your children if you are unavailable. Instructions to Guardians: Share crucial life-shaping guidance with you your children’s guardians, including values, family traditions, education plans, discipline, spiritual upbringing, and other important wishes on how you want your children raised. Recorded Legacy Interview: Preserve your intangible assets in a recorded interview that can be shared with your children and loved ones— your stories, values, and insights. Throughout your life, you spend significant time planning for your children—selecting schools or sitters, after-school activities, saving for education, birthday parties, holidays, vacations—you plan, plan, plan. So why does some of the most important planning for your children get pushed to the bottom of your “to-do” list? Shouldn’t planning for what will happen for your children if something unexpected occurs be a top priority? Relying on luck isn’t the best strategy for your children's protection. If you are a parent of minor children, your estate plan must start with ensuring that your children will always be cared for by the people you choose, in the way you want, no matter what happens. It’s essential to explore the logistics of “what would happen” to your kids if something happens to you and make sure there are no gaps in your plan and that decisions are legally documented. We’ve designed an estate planning process that is highly flexible for busy parents. Call us to learn how we can help you implement a protection plan for your minor children—no more last-minute panicking before a trip or a night out without the kids. |
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