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!
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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. As Estate Planning Attorneys, one thing that we cannot stress enough is the importance of having a will in place. Having a will is the only way to be certain that your wishes for your family and your estate will be honored when you pass away. Without a will, state laws determine what happens to your estate and even to your minor children. In the video below, attorney Kelly Jesson talks about some things that can happen if you pass away without a will in North Carolina. Please call Jesson & Rains if you have questions about getting your will prepared or updating an existing will.
By Attorney Kelly Jesson
The Supreme Court has issued many newsworthy rulings recently, but one you might not be familiar with is the Connelly Case. In Connelly v. United States, the Supreme Court held that the value of life insurance proceeds paid out to a business after the death of one of its owners must be included in the date of death valuation of the business. For the past twenty years, life insurance paid to a business as the result of an owner’s death has not been included in the business valuation if the business had an obligation to purchase the deceased owner’s interest in the business back. The reasoning was that this was a liability that the business owed. If a business was paid $3 million dollars in life insurance but it was obligated to pay the deceased owner’s family $3 million dollars, then it’s a wash. The implications of this ruling are significant. A business that is the beneficiary of life insurance proceeds may be valued much higher than it “really” is. For example, let’s say there are two owners of Widget Corp. The business is worth $5 million, so the owners each had $2.5 million dollars in insurance taken out by the corporation. At the death of one of the owners, the corporation was to redeem the deceased owner’s shares, which were worth $2.5 million prior to death. After the Supreme Court ruling, the business is actually worth $7.5 million ($5 million + life insurance). If the agreement was to pay half the value, the corporation would owe the family $3.75 million but only have $2.5 million in cash to do so. For people who may have to pay estate taxes (oftentimes business owners!), the difference in a few million dollar valuation can result in huge tax payments. And to add insult to injury, the family could end up paying taxes on assets they didn’t really get. In the above example, the true value of the business interests was $2.5 million but they would have to pay tax on the $3.75 million valuation if it was a taxable estate. The ruling requires business owners to carefully review their buy-sell and operating agreements to see how valuations will be determined. Is it the date of death value, or the value put on the business at the beginning of the year, or the value of the life insurance? While you can’t exclude life insurance for IRS purposes, you may be able to for buy-out valuation purposes. One way around this ruling is to use cross-purchase agreements. Instead of the business owning the life insurance policy, the individual owners will own life insurance policies on each other. When one owner dies, the life insurance is paid out to the other owners, not the business. Also, more people may utilize LLCs to own life insurance policies. The problem with cross-purchase agreements is that if you have a lot of owners, you have a lot of policies. If there are three owners, for example, there are six policies. If you set up an LLC to own the insurance policies (and then the LLC uses the money to buy the deceased owner’s interest), there are fewer policies. In this example, there would be three instead of six. If you would like additional information, or if you need a review of your business’s insurance and operating agreements, please don’t hesitate to contact the attorneys at Jesson & Rains. By Attorney Edward Jesson
Just over a year ago, on May 18, 2023, the diesel engine on a trailer carrying spray foam insulation caught fire. That fire spread to the first floor of the 239 unit apartment building that was under construction in South Park and ultimately caused the death of two workers on the sixth floor of the building who were unable to escape. Moreover, the North Carolina State Fire Marshall said that they almost lost eight to ten firefighters fighting the fire, but they were all luckily able to get out of the situation. Now, the North Carolina Fire Marshall’s office is attempting to adopt and implement the most recent National Fire Protection Association (“NFPA”) standards for the safeguarding of construction. The 2022 NFPA standards include a chapter specifically for improving fire safety in large wood frame structures, such as the one that burned down in South Park last year and the apartment complex that burned down while under construction in Raleigh several years ago. The updated NFPA standards include several new safety measures that are not currently being implemented in North Carolina. For example, the 2022 standards require that, when building a large wood framed structure, there is an onsite fire prevention program manager (who should be hired by the property owner) who is required to conduct and record daily inspections which can then be shared with local building department and fire department officials. There are other amendments to the North Carolina fire code, too, for example, it may ban torch applied roofing systems which are roofing systems requiring an open flame to install, and the new amendments to the code could limit the use of various direct fired HVAC systems that use combustion to generate heat. The proposed changes are set to go into effect on January 1, 2025. Prior to this, North Carolina usually updated its fire code every six years, however, these changes have been brought about quicker in direct response to last year’s South Park fire. If you need additional information regarding the new safety requirements, please don’t hesitate to contact the attorneys at Jesson & Rains. By Senior Associate Jeneva Vazquez
As a parent, sending your child off to college is a significant milestone filled with excitement and a bit of apprehension. With all the preparation to send your child to college, one crucial aspect that often gets overlooked is guiding your child to execute key legal documents. Once a child turns eighteen, the child is considered an adult in the eyes of the law. This means that parents are no longer given access to their child’s financial, health, and educational records without the consent of their adult child. For this reason, it is essential for parents and young adults to discuss the importance of healthcare powers of attorney and durable powers of attorney before a child heads off to college or when your child turns 18 years old. We emphasize the importance of proactive planning for young adults and we can guide you through the essentials of a Young Adult Plan. Durable Power of Attorney: A Durable Power of Attorney is a legal document that allows your child to designate someone they trust—typically a parent—to make financial decisions on their behalf if they're unable to do so. The Durable Power of Attorney can be used to allow parents to pay a child’s bills, access the young adult’s personal bank account, or manage the child’s finances or legal decisions in the event of an emergency. Without a Durable Power of Attorney, you would not be able to manage your child’s financial and legal affairs during an emergency without petitioning a court to be appointed the child’s legal guardian, which can be a lengthy, costly, and invasive process. Imagine your child is studying abroad or incapacitated due to an illness or accident. Without a Durable Power of Attorney, you might face significant hurdles in managing their financial affairs, potentially leading to unpaid bills or financial complications. By establishing a Durable Power of Attorney, you ensure that you can step in and manage things, reducing stress during challenging times. Health Care Release of Information: Facilitating Communication The Health Insurance Portability and Accountability Act (HIPAA) protects your child's medical information, ensuring privacy but sometimes hindering communication between healthcare providers and you. A Health Care Release of Information authorizes specific individuals to access your child's medical records and communicate with healthcare professionals on their behalf. This is particularly important in emergencies where timely information is critical. Without this authorization, you might struggle to obtain necessary information about your child's condition or treatment options, potentially delaying crucial decisions. Health Care Agents: Honoring Your Child's Wishes A Health Care Agent, designated through a Health Care Power of Attorney, is someone your child chooses to make medical decisions for them if they're unable to do so. This ensures that their healthcare preferences are honored, even if they cannot communicate for themselves. A Health Care Power of Attorney is crucial for children who are going to college outside of North Carolina because the laws of that state will control who may be able to make medical decisions on behalf of the child if they are incapacitated. In North Carolina, the majority of the child’s parents can make healthcare decisions if the child is unable to. This means that parents will be joint decision-makers and must agree on all actions taken by doctors. However, other states may be different. There might not be a default decision maker for healthcare decisions in your child’s state. Taking the First Step: Parents should know that the adult child must be the one to hire the attorney, and the child is free to name anyone they want to serve in these roles. The child can keep these documents on file with their university or medical provider so that it can be easily accessed if needed. Finally, now that your child has turned eighteen and is getting ready to enter adulthood, it may be a good time for you to review your estate plan to make sure that it still meets all of your needs and goals. Now that they are adults, your children can serve in important roles for you. Please call Jesson & Rains if you have questions about these documents or want to learn more about protecting you and your child’s interests through estate planning. |
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