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 Attorney Kelly Jesson

In this second part of the series, we’re focusing on asset protection and estate planning. Two weeks ago, we wrote about protecting your assets from creditors during your lifetime. Through estate planning, we help people plan to protect their estate assets from their creditors as well as the creditors of the beneficiaries.

One of the main purposes of the estate administration process is paying the deceased person’s bills, and if they have a lot of debt, that can wipe out assets meant for the next generation. However, there are a few assets that are protected from the deceased’s creditors: if your spouse or children are listed as the beneficiary of a life insurance policy or retirement account, when you pass away, that money will pass to your loved ones free and clear of any creditor claims. Additionally, if you own real estate with your spouse as “tenants by entireties” (TBE), they will inherit it at your death free and clear of any creditor claims. Other assets, like cars, bank accounts, investments, and business interests may be up for grabs.

Unfortunately, this does not mean that these assets are now exempt from the beneficiaries’ creditors. If one of our client’s goals is to protect the beneficiary from the beneficiary’s creditors, we must set up a trust. There are different types of trusts that provide protection from a beneficiary’s creditors. The thing they have in common is not making distributions to the beneficiary mandatory and giving the trustee discretion to not give the beneficiary money in certain circumstances. For example, if the trustee was required to distribute $5,000 to a beneficiary each month, the trustee has no discretion, and that money would go right into the hands of a creditor upon distribution (or worse yet, a creditor may attach a lien to the trust). However, if the trust agreement provided that the trustee could decide to withhold or delay a distribution to a beneficiary if they had a creditor (for example, they had filed for a divorce or bankruptcy), the $5,000 would not belong to the beneficiary because it would not be a guaranteed distribution, and the trustee could wait to make the distribution months or even years down the road until the beneficiary’s situation resolved itself. If it did not, the money would likely go to the decedent’s grandchildren, which most clients prefer versus a creditor.

It goes without saying, but one of the main ways we help clients protect assets for their beneficiaries is through planning to minimize costs at death. For example, we make sure clients have beneficiary designations updated. If a large life insurance policy goes through probate, it could cost the family thousands of dollars in court costs. For clients who own property in multiple states, we can help by transferring their properties to a revocable trust now instead of their loved ones spending thousands of dollars probating their estate in multiple states after they pass away. Of course, if an estate tax bill is anticipated, there are many things we can do to minimize those effects.

If you are interested in implementing any of the above ideas in order to protect your assets, please give the attorneys at Jesson & Rains a call!

​By Attorney Kelly Jesson

Creditors come in all shapes and sizes: ex-spouses, bankruptcy, personal and business debts, and claims involving real estate or professional malpractice. People in high risk professions or who deal with circumstances that are prone to litigation sometimes want to take steps to protect assets. However, this must be done before a dispute arises, because moving assets around afterwards can sometimes be deemed a fraudulent conveyance and voided by a court.

Unfortunately, there is no “magic wand,” and protecting assets oftentimes involves investing your earnings into protected accounts, such as life insurance and retirement. An individual’s retirement account is exempted from their own creditors (but not from a beneficiary’s creditors once the assets are inherited, which will be discussed in the next blog dealing with asset protection in estate planning). The cash value of a life insurance policy is also protected from the insured’s creditors, but again, not from a beneficiary’s creditors once the assets are inherited.

Additionally, the state of North Carolina exempts certain amounts of property from creditors:

• up to $35,000.00 of the value of the debtor’s or dependent of the debtor’s residence or burial plot, except if a debtor is 65 or older, they may exempt up to $60,000.00 if the property was previously owned with a deceased spouse (known as the “homestead exemption”)
• up to $5,000.00 of the value of any property if the debtor has not used their entire homestead exemption
• Professionally prescribed health aids for the debtor or a dependent of the debtor

• up to $3,500.00 in value of one motor vehicle
• up to $5,000.00 in value, plus an additional $1,000.00 for each dependent of the debtor, not to exceed $4,000 extra total for dependents, in household furnishings, household goods, clothing, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor
• up to $2,000.00 in value of professional books, implements, or tools of the trade
• up to $25,000.00 in funds in a 529 college savings plan.

One of the most important things you can do is title property as “tenants by entireties” (TBE). If a husband and wife purchase property together, by default, it is owned as TBE and is therefore protected from the creditors of just one of them, meaning a lien will not attach. However, if a creditor gets a judgment in both spouses’ names, a lien can attach. Also, if the spouses divorce or one passes away, a lien can attach if the remaining owner is the debtor. Another alternative or high-risk professionals is to have the low-risk spouse own the majority of assets because they will not be responsible for debts unless joint.

Another really important step is for self-employed people to form businesses and formalize businesses to protect assets. If you follow business formalities, business creditors cannot reach your personal assets for business debts. If you own investment properties, you are running a business. In fact, the definition of “operating a business” is pretty loose, and oftentimes people will move high-value assets over to LLCs for asset protection purposes. Again, you must follow business formalities (set up a tax identification number, maintain a separate bank account, have an operating agreement).

If you own a business but you have personal creditors, those cannot reach assets titled in the name of your business. They are limited to collecting only the distributions you receive from the business, which you control as the business owner. Distributions do not include your pay made through payroll, which is another reason to run your business like a business.

Finally, we’re often called by people to set up trusts to avoid creditors. General living trusts or revocable trusts are not protected from creditors of the grantor (the person who sets it up), although the funds could be protected from beneficiaries’ creditors after the grantor dies (the subject of our next blog). North Carolina residents have a few not-so-great options: First, they can set up an irrevocable trust for the benefit of others. For example, if you are married, you can create an irrevocable trust that benefits your spouse for his or her lifetime.  Presumably, your spouse will take care of you while you’re married, so you will indirectly have access to the money you put into the irrevocable trust, although on paper it will no longer belong to you, so your creditors cannot reach it. This obviously has risks, but it is an option.

Another option is an asset protection trust. In an asset protection trust, the trustee has discretion to distribute money to the grantor as well as other beneficiaries. These trusts are not valid in North Carolina, although they are available in seventeen other states and other countries. However, North Carolina residents can pick the situs (jurisdiction) of their trust and where the trustee is located, meaning, for example, that you can state that Georgia law applies to your trust even though you live in North Carolina. However, lawmakers in North Carolina have questioned whether this practice is valid for asset protection trusts, and, therefore, there are some risks involved. Of course, transferring funds to another country is always risky.

If you are interested in implementing any of the above ideas in order to protect your assets, please give the attorneys at Jesson & Rains a call!