​By Attorney Edward Jesson

For landowners who are concerned about taxes and/or their property being developed after they pass away, whether it be farmland, timberland, or mountain land, a conservation easement can be a valuable tool in estate planning. When properly utilized, conservation easements can protect land from future development, generate meaningful tax benefits at both the state and federal level, and help ease the transfer of property to the next generation.

Conservation easements are voluntary legal agreements between the landowner and a qualifying land trust or government entity that permanently limits certain uses of the land to protect its conservation value as undeveloped land. The landowner still owns the land, and can sell it, lease it, or pass it on to their heirs, but the easement runs with the land, meaning that the specific conservation restrictions bind all future owners, not just the person who granted it. Common restrictions may include limits on subdivision, commercial development, and mineral extraction, while still allowing things like agricultural use, timber management, and various recreational uses.

There can be several tax benefits to using conversation easements in your estate plan.  In North Carolina specifically, a conservation easement can provide a significant reduction in property taxes.  Someone who makes a qualified donation of a real property in North Carolina for an approved public benefit may be eligible for an income tax credit up to 25% of the fair market value of the land.

For high-net-worth individuals concerned about estate tax exposure, conservation easements can reduce a property’s fair market value due to the development restrictions, thus lowering their total net worth. Moreover, when land is donated to an eligible organization, it is usually treated as a charitable donation leading to significant tax benefits.

There are, of course, tradeoffs. Once recorded, a conservation easement cannot be undone by the current or future owner who has a change of heart about the best use of the land.  The specific terms of the easement are negotiated between the landowner and the holding organization, and the drafting stage is critical: a well-drafted easement, properly integrated into the broader estate plan, can protect both the land and the family for generations. On the other hand, a poorly drafted one can create restrictions no one intended and cause disputes among heirs who never agreed to them in the first place.

Anyone considering a conservation easement as part of their estate plan should work with an attorney early in the process, well in advance of signing anything restrictive, to make sure the easement's terms actually reflect the family's long-term goals and that the certification and credit application deadlines aren't missed. The attorneys at Jesson & Rains are ready to assist you in creating a conservation easement and all of your other estate planning needs. 

​By Associate Attorney Nicole M. Perozzi

If you’ve recently inherited a tax-deferred retirement account, such as a traditional IRA, you’ve also inherited a deadline.  The rules for liquidating an inherited IRA have significantly changed since 2020 with the enactment of the SECURE Act.

Prior to 2020, a beneficiary could “stretch” withdrawals from an inherited IRA over their entire lifetime, allowing tax-deferred assets to potentially grow for decades.  The SECURE Act ended that option for most beneficiaries.  If you do not meet one of the exceptions (such as being a surviving spouse), you likely will need to liquidate the entire IRA within 10 years of the deceased owner’s death.  The IRS further clarified in 2024 that if the deceased owner had already started taking their own required minimum distributions (“RMDs”) before death, the beneficiary must also take annual withdrawals in years one through nine of that 10-year period. Missing one of those withdrawals can trigger a steep penalty.

The rules that apply also depend on who it is that inherits the account-- whether you are the named beneficiary, the deceased owner’s Estate is the beneficiary, or deceased owner’s Trust is the beneficiary.

If you are directly named as the beneficiary, the standard “10-Year Rule” usually applies. However, if you are a surviving spouse, a minor child, or a disabled or chronically ill beneficiary, you may be able to stretch withdrawals over a longer period of time.

If the deceased owner’s Estate is the beneficiary, the Estate is not treated the same as an individual, and the same 10-Year Rule does not apply.  The rules are stricter, and how strict depends on whether the owner had already begun their own RMDs before death.  If not, the IRA typically must be liquidated within five years.  Plus, higher tax rates on withdrawals could apply.

If the deceased owner’s Trust (or subtrust) is the beneficiary, the Trust may be able to qualify for the 10-Year Rule, but this requires very careful drafting.  A Trust prepared before the SECURE Act may not work as intended.  If the Trust fails to qualify, it will be treated like an Estate and lose the more favorable rules.

Naming the wrong beneficiary on your IRA can carry significant tax consequences upon your death.  If you've recently inherited an IRA, or you're unsure how to name the beneficiaries on your own personal IRA, contact us today at Jesson & Rains to discuss your options!

​By Associate Attorney Ashley N. Bonomini

With various AI programs so readily available, many people have turned to using AI software to draft contracts and other legal documents. But when it comes to contracts, relying on AI can create significant legal and financial risks. Many of these AI generated documents are incredibly general and often lack specific terms that are essential to the enforcement of an agreement. A North Carolina man recently learned this the hard way when he sued to enforce a contract provision that was too vague and missing essential terms.

In Langley v. Autocraft, Inc., a former employee sought to enforce a provision in his employment agreement that stated he would receive a 10% ownership interest in the company after five years of continuous employment. Although the provision appeared to be straightforward, it failed to include terms regarding the purchase price of the ownership interest, how the price would be calculated, financing terms, payment schedules, or other terms that would be material to the transaction. Since North Carolina courts cannot create essential contractual terms that were never negotiated by the parties, the Court found the ownership provision was void for indefiniteness and thus unenforceable.

The inclusion of specific and essential terms in a contract is where AI falls short. AI programs and online templates can be exceptionally good at predicting what legal language should look like. However, they are far less capable of determining the legal language that is actually necessary for a particular transaction. AI does not know your business objectives, does not understand your industry, fails to look at your negotiating leverage, nor addresses state-specific legal requirements that it should address in the agreement.

Instead, AI generates language based on patterns it has learned from training models and other text. Even when you continue to use the same program and it learns more and more about your business and industry, it usually omits critical provisions or leaves out specific details necessary to ensure the agreement is enforceable. These omissions often lay dormant, only rearing their ugly heads when a dispute arises and fixing the problem becomes an incredibly tedious – and significantly expensive – undertaking.  It costs less to pay an attorney to draft the document correctly the first time than pay an attorney to litigate an issue later.

The Langley case is a reminder that just because AI can create a document that is professional and polished, it does not mean that it is the best contract for you.  You will not be protected using AI for your contracts.  Whether you’re entering into an employment agreement, buying or selling a business, contemplating a commercial transaction, or forming a new entity, the attorneys at Jesson & Rains, PLLC are ready and able to assist you in ensuring your contracts actually protect you.

​By Attorney Edward Jesson

When business owners think of employee handbooks, oftentimes they think of it as just one more administrative task that needs to be checked off the list when onboarding a new client. Because there are so many online HR services that will offer an employee handbook as part of their services, it can be tempting to just take whatever they have on offer and call it a day.

However, in North Carolina, and many other jurisdictions, the employee handbook is not just a HR document, it’s a legal document which can create legally binding promises between your business and your employee. Often, what you’ll obtain from your online HR service is a generic template, designed to work for thousands of clients over multiple jurisdictions and over many different industries. However, generic, nonspecific language is a risk when it comes to your employee handbook.

Employment law is highly state specific; what is required in, for example, California, can be vastly different from what is required in North Carolina. For example, North Carolina’s Wage and Hour Act has very specific rules on what can be withheld from an employee’s final paycheck and under what circumstances a business can withhold those funds. Violating the Wage and Hour Act can result in, among other things, an award of treble damages for the aggrieved employee as well as the business having to pay that former employee’s attorney’s fees—that can turn a small mistake into a big financial headache.

One example of an employee handbook that we recently came across discussed final paycheck withholdings and simply (and generically) stated that “state law applies.” In North Carolina, that is insufficient, the employee handbook has to state, specifically, what withholdings may be withheld from that final check. Accordingly, the employer wasn’t able to withhold anything from the paycheck, despite having invested a lot of money in training that the employer wished to recoup.

Your employee handbook is one of the most important legal documents your company has. It governs how you treat your employees, how you handle disputes, and how you hold up in court. Delegating it to an HR platform because it's convenient is like using an online will generator because it's fast — it might technically do the job, until it doesn't. And when it doesn’t, there are going to be real issues that arise as a result.

If you need an employee handbook reviewed, or need a handbook drafted from scratch, the attorneys at Jesson & Rains, PLLC are ready and able to assist in ensuring it’s compliant with your state’s legal requirements.