During this unprecedented time, we are open – albeit, conducting meetings via telephone and video conference – and ready to assist you with any legal questions you might have about any of the following (and more):

• Working remotely
• Ramifications of closing your business
• Liability for remaining open for business or holding events
• Employee wage issues, including the pending employment law (federal legislation has passed the House, but not Senate)
• What happens if you cannot perform as required under your contract
• What happens if your vendor cannot supply as required under your contract
• Do you have to issue refunds?
• Should you amend contracts now?
• SBA Disaster Assistance Loans for Small Businesses 
• Interpretation of business interruption insurance clauses

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The beauty of being a technologically advanced firm is that really very little will change. All of our systems are already cloud based, we have e-signature and credit card processing via email, and we can do telephone and video Zoom meetings as requested!

For our clients with court matters: The Chief Justice of the North Carolina Supreme Court has postponed most court hearings indefinitely (excepting emergency hearings). However, court filing deadlines are still in effect.  

We are asking our clients to allow our team to mail in court filings instead of hand delivering them to the courthouse.  This will result in a delay, and for probate matters, it may result in a substantial delay. We need to lead by example. We hope you understand. 

For our estate planning clients: As of right now, we can still hold signing ceremonies if it is really important to our clients that their documents are executed soon.  We do not want to delay considering we could be “social distancing” for an extended period of time. However, this only applies to our clients who are not sick, have not been around someone with flu-like symptoms, and are comfortable coming into the office. We will be taking extra precautions surrounding the signing ceremonies like not shaking hands or sharing pens.  We will clean thoroughly before and after each appointment.
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We could also utilize a clipboard and do signings through a cracked car window. Another option is to mail your documents to you along with detailed instructions, but this only works if you have access to two unrelated, non-beneficiary, non-healthcare worker witnesses and a third person who is a notary. Our ability to make on-the-spot edits would be limited in these two circumstances.

For our elderly or immune-compromised clients: Please let us know if there is anything we can do to assist you in getting food or supplies.  We are happy to simply drop at your door.

By Associate Attorney Danielle Nodar
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After completing the numerous steps to form a business, business owners sometimes forget that they have to file annual reports with the North Carolina Secretary of State to keep their business active.

Each Business Corporation, Limited Liability Company (LLC), Limited Liability Partnership (LLP), and Limited Liability Limited Partnership (LLLP) must file an Annual Report. Limited Partnerships, Professional Corporations (PCs), and
Professional Limited Liability Companies (PLLC’s) do not have to file an Annual Report.

The due date for your business’s annual report depends upon the type of business. 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. The due date for LLC’s Annual Reports is April 15 each year after the date of creation. There is also a fee due each year when filing the Annual Report. For LLC’s and partnerships, the fee is $200 and for corporations, the fee is $25.

Businesses can file their Annual Report to the Secretary of State’s Office by mail, or they can file their Annual Report and pay the fee online via the Secretary of State’s website.

The Annual Report is used to keep the business records on file with the North Carolina Secretary of State up to date. On the Annual Report, you will provide basic information about your business, such as the nature of the business, the name and address of the registered agent, the principal address of the business, and the names and signatures of company officials.

The consequence for not filing an Annual Report and/or paying the fee is that the Secretary of State can administratively dissolve your business for failing to file the Annual Report. 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.

It is important for business owners to make sure their registered agent information and email address is current throughout the year because the Secretary of State sends notices related to the Annual Report to the registered agent and the email it has on file for the business. We see a lot of businesses get dissolved and the owner does not even know because they have not updated their registered agent’s information in years (or paid their professional registered agent’s fee, who promptly drops them as a client).

If you are a business owner and have questions about filing your Annual Report or reinstating a business that has been dissolved for failure to file an Annual Report, contact Jesson & Rains.

​By Attorney Kelly Rains Jesson

​Naming a guardian for minor children is one of the top reasons why a parent engages in estate planning. The only way to name a guardian for a minor child in the state of North Carolina is in a will (N.C.G.S. § 35A-1225(a) references “last will and testament” but does not mention any other document). So, making it a Facebook status or writing it on a cocktail napkin before a trip is not going to cut it.

Even though the statute states that the guardian named by the parent is a “recommendation” that serves as a “strong guide” to the clerk, court history shows that the clerk almost always will appoint the guardian named in the will, unless it’s not in the best interests of the child (for example, if the named guardian was a drug addict, felon, or incapacitated). The North Carolina legislature wrote that “[p]arents are presumed to know the best interest of their children.”

We recommend that parents agree on their choice of guardian in the event they both pass at the same time. If they name different guardians in their respective wills, there could be a dispute over who would serve, which defeats the purpose of naming a guardian in the will in the first place. However, a long-surviving spouse may update his/her will after the first spouse passes away. If that is the case, the court will appoint the guardian named in the will with the latest date.
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If you or someone you know needs help creating a will and naming a guardian for minor children, give Jesson & Rains a call!

By Associate Attorney Danielle Nodar

The California Consumer Privacy Act (CCPA), the strictest U.S. law regulating consumer data privacy, became effective on January 1, 2020. Even though the CCPA protects California consumers only, North Carolina business owners with E-Commerce businesses should take note because the law may apply to their business. The law applies to a business “doing business in California,” which includes selling goods or services to California residents even if the business is not physically located in California.

The CCPA gives California consumers certain rights to their data privacy, including the right to know what kinds of personal data a business collects, uses, shares, or sells to third-parties. Consumers will also have a right to request that a business delete any personal data kept on the consumer or prohibit the sale of personal data to third parties. The CCPA also protects a consumer with guarantees that a business will not penalize the customer with higher prices or lower levels of service if they request information regarding their data or data deletion.
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A business must comply with the CCPA’s data privacy requirements if it collects and sells consumer personal information of a California resident or discloses personal data for a business purpose. “Personal information” is broadly described as “information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular California resident or household.” This includes many identifiers such as name, address, social security number, email address, IP address, and geolocation data.

Since CCPA doesn’t just apply if a company sells data, it is important to understand how “business purpose” is interpreted under the statute. The CCPA defines “business purpose” as “the use of personal information for the business’ or a service provider’s operational purposes, or other notified purposes, provided that the use of personal information shall be reasonably necessary and proportionate to achieve the operational purpose for which the personal information was collected or processed or for another operational purpose that is compatible with the context in which the personal information was collected.” Some examples include 1) to fulfill the reason the information was provided (i.e. to provide the requested product or service); 2) administer websites; 3) perform market research; 4) advertise products and determine effectiveness of such marketing; 5) internal research for technological and business development; 6) debugging and repairing errors on websites; and 7) detecting against security incidents, including fraudulent or illegal activity.

Luckily, there is an exception for small businesses. For CCPA to apply, businesses must meet at least one of the following requirements: 1) Businesses with a gross annual revenue of $25 million or more; or 2) Businesses that possess personal data from 50,000 or more individuals, households, or devices; or 3) Businesses with at least 50% of their annual revenue earned from the sale of personal data.

If a business is subject to the requirements of CCPA, there are some steps that can be taken to ensure compliance. Prior to collecting data from consumers, businesses must inform the consumers of the categories of personal information the company collects and for what purposes the company uses the information. Companies must also provide consumers with at least two designated methods for submitting requests for information, including a toll-free telephone number and, if the business has a website, a website address. The business also must ensure it has protocols in place to respond to such requests free and within 45 days of receiving a verifiable request. The company must also maintain records of all requests made and how the company responded. A business can provide this type of information to consumers with an updated, comprehensive privacy policy that is easily accessible to consumers on the company’s website.
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If you believe that you may need to make your business CCPA compliant, contact Jesson and Rains for help with understanding and complying with these new data privacy regulations.

President Trump signed a new law in December that has taken effect this month called the SECURE Act (Setting Every Community Up for Retirement Enhancement Act). It includes a wide array of changes to retirement accounts that both individuals and business owners should know.

For individuals, here are a few highlights:

• Plan participants who did not already turn 70.5 in 2019 now do not have to take required minimum distributions (RMDs) until age 72.
• 529 accounts may now be use for qualified student loan repayments up to $10,000 total.
• Up to $5,000 may be withdrawn from 401(k) accounts without penalty in order to have or adopt a child. The distribution, which is still subject to tax, can be repaid to a retirement account.
• Plans may offer qualified disaster distributions without penalty to participants who lived in a presidentially declared disaster area if taken before age 59 1/2, and participants are permitted to spread taxes on the distribution or repay it over three years.
• The age limit (70.5) for traditional IRA contributions has been eliminated. However, it appears to require that Qualified Charitable Distributions come from pre-70.5 contributions.
• One potential downside to the law is that inherited IRAs must be spent within 10 years of inheritance (the government wants to hurry up and get those taxes) regardless of the age of the owner at time of death. If the IRA owner died in 2019, the new law does not apply to the beneficiary. We previously wrote about the old law and estate planning here.
  • There are exceptions to this rule: spouses, minors, disabled individuals, chronically ill individuals, or beneficiaries within ten years of age to the decedent.
  • It is unclear yet whether a trust for the benefit of spouse and children is an exempted beneficiary.
  • When a minor child reaches the age of majority (18), the ten-year clock starts. It is unclear how trusts will be treated where there are multiple children of different ages.
  • The definition of a disabled individual is a person who is “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.” IRC §72(m)(7).
  • The definition of a chronically ill individual relates to the code section dealing with the deductibility of long-term care expenses. That section requires a licensed health care practitioner to certify that the individual’s limitation is indefinite but expected to be lengthy in nature, as well as one of three things:

                        (i) being unable to perform (without substantial assistance from another individual) at least 2 activities of
                        daily living for a period of at least 90 days due to a loss of functional capacity,

                        (ii) having a level of disability similar (as determined under regulations prescribed by the Secretary in
                        consultation with the Secretary of Health and Human Services) to the level of disability described in
                        clause (i), or,

                        (iii) requiring substantial supervision to protect such individual from threats to health and safety due
                        to severe cognitive impairment.
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Business owners should be aware of the following:

• The business tax credit for plan startup costs will increase from $500 to up to $5,000 in certain circumstances. 

• There’s an additional $500 tax credit for three years for plans that add automatic enrollment of new hires.

• The cap on payroll contributions in automatic-enrollment safe harbor plans has increased from 10% to 15% of wages (employees can opt out of the increase). 

• Employers must now include long-term part-time workers as participants in defined-contribution plans if they have completed at least 500 hours of service each year for three consecutive years and are at least 21 years of age. However, these participants can be excluded from safe harbor contributions, nondiscrimination and top-heavy requirements. 
• Employers and plan sponsors are now more likely to include annuities as an option by reducing their liability if the insurer cannot meet its financial obligations.

A financial adviser would be the best person to contact if you have any questions about how the SECURE Act affects your retirement, and a CPA would be a good person to contact regarding business credits. However, if you want to discuss how eliminating the IRA lifetime stretch might affect your estate plan, give Jesson & Rains a call.

​​By Attorney Edward Jesson
          
This week’s article deals with the responsibilities that contractors have with regards to the actual design of the building, which necessarily includes the building’s structural system. Generally, the contractor responsible for building the project, be it new construction or otherwise, is not responsible for the design aspects of the project unless we are talking about a design-build project. The design aspects will usually fall to a “design team,” often comprising of some combination of architects and engineers. Or, more often in the residential setting, the owner will provide plans and specifications to the contractor.

The following problem has come up time and time again: a general contractor finishes work on a project, built perfectly to the plans and specifications, only to find out that the plans and specifications were defective in some way, which has then caused issues with the final project (at the extreme end, these issues could be structural, rendering the completed project unfit for purpose). Invariably, on discovery that the project has some serious issues, the project’s owner will first turn to the general contractor to “fix it.” Of course, if “fixing it” involves starting from scratch, neither the owner nor the contractor wants to come out of pocket to pay for that.

Legally speaking, the courts throughout the United States have created a doctrine whereby the project owner impliedly warrants that the information, plans, and specifications that an owner provides to the general contractor are fit for purpose. In a residential setting, even if the owner used a design team, if the owner provided plans and specifications to the contractor, this doctrine would likely still apply. This doctrine is known as the Spearin Doctrine and arises from the case United States v. Spearin, which was argued in the United States Supreme Court in 1918.

What this essentially means is that, so long as the contractor complies with the plans and specifications supplied to it by the project owner, the contractor cannot be held legally responsible for structural defects if those plans and specifications are not adequate for the specific project. Contrast this, for example, with a design-build project, where the contractor or its consultants are partially responsible for the design aspect of the project, and you can see how Spearin would likely be inapplicable to those circumstances.

There are, of course, exceptions to this general rule. For example, if there is an express term contained in a contract that the contractor is responsible for any design defects, then it is likely that a contractor in that situation could be held legally responsible. Another exception is that of “reasonable reliance,” which means that if a design defect is so glaringly obvious that it could not be missed, a contractor would not then be able to later claim that they relied on the plans in order to avoid liability.

While generally not directly responsible for the design of structural systems (or, indeed, other areas of a project), that does not mean that a contractor cannot be held liable for deficiencies in the design. The best protection against issues such as the ones presented in this article are written contracts in place between all parties to a construction project, including the design team, and not just between the owner and general contractor.