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NC Court of Appeals Decides First Extended Benefits Case Under N.C. Gen. Stat. §97-29(c)

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Both sides of the bar have been anxiously awaiting decisions from the North Carolina Court of Appeals that will determine how claims for extended compensation pursuant to N.C. Gen. Stat. § 97-29(c) are handled.  The first decision in this line of cases has now arrived. 

In Sturdivant v. N.C. Dept. of Public Safety, the plaintiff sought benefits beyond the 500 weeks for his back injury.  On appeal, plaintiff argued that he had “total loss of wage-earning capacity,” and that the Industrial Commission erred in concluding that his burden of proof was higher than the standard for proving “total disability.”  The defense bar disagrees with this definition, and in their Amicus Brief (co-authored by Wilson Ratledge attorneys Frances M. Clement and Kristine L. Prati), the North Carolina Association of Defense Attorneys (NCADA) argued that in 2011, the Legislature created a separate section for extended compensation and specifically used the term “total loss of wage-earning capacity” instead of the term “disability,” therefore indicating that a different standard applies for an award of extended compensation.   

The Court of Appeals unfortunately agreed with plaintiff’s argument that “total loss of wage-earning capacity” is synonymous with “total disability.”  However, the Court of Appeals agreed with defendants’ argument that the burden of proof rests with plaintiff, and ultimately upheld the Industrial Commission’s denial for an extension of benefits, as the evidence showed that there were jobs available for plaintiff, and that plaintiff was capable of performing those jobs given his physical restrictions, education, and work history. 

We will be monitoring this case for any appeal to the N.C. Supreme Court, as well as a decision in two other extended compensation cases pending at the Court of Appeals.

Read the full decision here

If you have any questions about this case or extended compensation, please contact one of the workers’ compensation attorneys!

Gun Trusts in North Carolina: What are They and How Can You Set One Up?

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Want to protect your firearms and pass them down to future generations? A gun trust in North Carolina may be the solution. In our latest article, the North Carolina estate planning attorneys at Wilson Ratledge will explain what a gun trust is and how to set one up.

What is a Gun Trust?

A gun trust, also known as a firearms trust, is a legal entity that you create to hold and manage firearms. The trust is controlled by a trustee, who is responsible for managing the firearms and ensuring that they are used in compliance with state and federal laws. Beneficiaries of the trust, known as trust beneficiaries, are individuals who are allowed to access and use the firearms.

Benefits of a Gun Trust in North Carolina

There are several benefits to creating a gun trust in North Carolina. Some of the most notable include:

Allowing Multiple Individuals To Access and Use the Firearms

A gun trust allows multiple individuals, known as trust beneficiaries, to access and use the firearms. This can be especially useful for families who want to ensure that multiple members can use their guns for hunting or self-defense.

Protection from Creditors 

Assets held in a trust are generally protected from creditors. This means that if the trustee or one of the trust beneficiaries were to become the subject of a lawsuit, the firearms held in the trust would not be at risk of being seized.

Streamlining the Process for Obtaining Certain Types of Firearms

In North Carolina, certain types of firearms, such as those subject to the National Firearms Act (NFA), require a special process for acquisition and ownership. A gun trust can streamline this process and make obtaining these types of firearms easier.

Avoiding Probate

When a person passes away, their assets go through probate. Probate can be a lengthy and expensive process, and it can also make the assets public record. A gun trust can help to avoid probate and keep the assets private.

Avoiding the Need for a Will

A North Carolina gun trust can be used to transfer firearms to beneficiaries upon the death of the trustee, avoiding the need for a will.

How to Set Up a Gun Trust in North Carolina

Setting up a gun trust in North Carolina is a relatively simple process. It involves the following steps:

Choose a Trustee 

The trustee is the individual who will be responsible for managing the firearms and ensuring that they are used in compliance with state and federal laws. It is essential to choose a trustee that you trust and who has a good understanding of firearms and the laws surrounding them.

Choose Trust Beneficiaries 

Trust beneficiaries are the individuals who will be allowed to access and use the firearms. It is crucial to consider the age and experience level of the beneficiaries to avoid any potential legal issues that may arise from firearm misuse.

Have an Attorney Draft the Trust Agreement

The trust agreement is the document that sets out the terms and conditions of the trust. It should include information such as the trustee’s responsibilities, the trust beneficiaries, and the firearms to be held in the trust. The trust agreement should also include instructions for what should happen to the firearms in the event of the trustee’s death or incapacity.

Fund the Trust 

The trust must be funded with the firearms that will be held in the trust. This can be done by transferring ownership of the firearms to the trust or by purchasing firearms using trust funds.

Register the Trust 

In North Carolina, a gun trust must be registered with the state before acquiring any firearms subject to the National Firearms Act (NFA). The registration process will include submitting a copy of the trust agreement and a list of the firearms to be held in the trust.

Review and Update 

It is important to review and update the trust agreement regularly to ensure that it continues to meet the needs of the trustee and beneficiaries and complies with any changes in the law.

Contact Our Law Firm for Assistance

Gun trusts can be useful for managing firearms in North Carolina, but they are subject to an extremely intricate and complex web of state and federal laws. If you’re interested in setting up a gun trust, it’s important to work with one of our North Carolina trust attorneys at Wilson Ratledge. Our attorneys specialize in North Carolina firearms law, and we can help you set one up that meets your needs. 

Tax Hardship: What To Do if You’re Offered an IRS Offer in Compromise

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Owing The Government Large Sums Of Money For Taxes Can Be Daunting, But It Happens

It could happen any number of ways – whether through under-withholding, untaxed income, or estimating quarterly tax payments required – but every year, thousands of people find themselves owing the Internal Revenue Service more than they can repay, at least at that moment. The IRS is not famous for being in the habit of waiting for payment. The IRS has an impressive array of collection options – it can seize and sell your property to pay your tax debt, garnish your wages, and place liens on your home and bank account. 

Owing the IRS money is not a small matter. A payment plan is an option for many people, but if you owe a lot, IRS payment plans are time-limited, and you might be unable to afford the payments to pay off the entire debt during the time period of the payment plan. Fortunately for people in this situation, the IRS provides another option for repayment, known as an offer in compromise.

An Offer Of Compromise Provides An Avenue Out From Under Debts Owed To The IRS

An offer of compromise is a process whereby you can make an offer to the IRS to pay an amount that is less than you owe in satisfaction for the total debt. Basically, you file copious amounts of paperwork, including IRS forms that include detailed information about your financial situation, including assets, debts, and the like, and you offer an amount you consider yourself willing to pay instead of the full amount owed. While the acceptance rate for such offers used to be less than 25 percent, in recent years, that amount has increased to about 45 percent. If your offer is accepted, you are deemed to have satisfied your entire tax debt.

The process is complicated, but the IRS provides a Taxpayer Advocate Service that can give you some assistance regarding an offer of compromise. They provide assistance and information, not advice – you’ll have to go elsewhere for that.

What Is Required To File An Offer Of Compromise?

The first requirement is that you be eligible to file an offer of compromise. To pass that first hurdle, you must show that:

  • You are not currently in a bankruptcy proceeding.
  • You have filed all previously required tax returns and have made all estimated or actual payments for taxes due on those returns.
  • If you are applying for an offer in compromise for the current year, provided you are applying for an offer of compromise for the current year.
  • If you are an employer, you have made required quarterly tax payments for the current quarter and for the two-quarters previous to your applying for an offer of compromise

If you meet those requirements, you can move on to filing an offer of compromise. That, in itself, can be a daunting process. You will be required to complete several IRS forms and provide significant amounts of information regarding your monthly income, cash on hand, debt, and assets. You also will be required to detail monthly expenses, including rent or mortgage, grocery costs, utilities, and any other recurring monthly expenses. You also will have to pay the application fee, which is refundable if your offer of compromise is rejected, and payment toward what you propose as the balance due on your taxes. Obviously, the proposed balance due will be less than the amount the IRS says you owe. If you opt for a payment plan, you will include the first payment amount. You also could include payment for the entire amount owed that you propose. Even if your offer is rejected, however, the IRS will keep your payment and apply it to the amount of taxes the IRS says are owed.

There are a number of reasons the IRS might reject your offer. Among them are failing to meet any of the requirements for eligibility, you failing to include the application fee, or the IRS has referred your case to the Department of Justice for prosecution. Reasons for accepting your offer come down to whether the IRS believes it can collect the entire amount due or whether the IRS believes it can collect that amount but that it would be unfair, inequitable, or cause economic hardship.

If You Owe Significant Amounts To The IRS, Contact The Tax Attorneys of Wilson Ratledge

The IRS is a formidable opponent with an unmatched ability to disrupt your life financially and even seize your assets. If you owe money to the IRS that you can’t repay, you should consider an offer of compromise. You should contact the North Carolina tax attorneys of Wilson Ratledge. We have the knowledge and experience to help you through the process.

Daniel C. Pope’s Collaboration to Aid Ukrainian Refugees

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We are proud to announce that Dan was featured in the recent North Carolina State Bar Spring 2023 Journal!  Dan Pope’s connection to Ukraine and Ukrainian culture is deeply important to him and to his family. Uniting for Ukraine (“U for U”) provides a pathway for Ukrainian citizens and their immediate family members who are outside the United States to come to the US and stay temporarily in a two-year period of parole.  Find out how Dan and attorney Benjamin A. Snyder, chair of the Immigration Subcommittee of the North Carolina State Bar’s Board of Legal Specialization, joined forces to help a family arrive in the United States by reading the full publication here.

We give sincere thanks to all, including Dan and Ben, who have supported the humanitarian aid for Ukraine.  To find out more about the United for Ukraine project, visit DHS, USCIS or United for Ukraine.

How Do You Set Up a Spendthrift Trust in North Carolina?

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A spendthrift trust is created by an individual (the settlor) for the benefit of another individual (the beneficiary). It is commonly used to protect the assets for the benefit of an individual who may not be financially savvy or who may be at risk of incurring significant debts. 

The North Carolina estate planning attorneys at Wilson Ratledge explain the main reasons why people consider setting up a spendthrift trust which are as follows:

  1. Protection of Assets from Creditors

One of the primary advantages of a spendthrift trust is that it provides protection for the trust’s assets from the beneficiary’s creditors. This means that the assets of the trust are not subject to seizure by the beneficiary’s creditors to satisfy outstanding debts. This can be an important consideration for individuals at risk of incurring significant debts, such as those with a history of financial irresponsibility or those at risk of legal liability.

  1. Professional Asset Management

Another advantage of a spendthrift trust is that it allows for professional asset management. The trustee, who is typically a financial institution or an individual with expertise in financial management, is responsible for managing the assets of the trust in a way that is consistent with the terms of the trust agreement. Even with smaller trusts for which an institutional trustee may not be cost effective, the trustee can engage the services of a financial advisor for this purpose.  This can provide peace of mind for the settlor, knowing that the trust assets are being managed by a professional acting in the beneficiary’s best interests.

  1. Flexibility

Spendthrift trusts can also be tailored to meet the specific needs and goals of the settlor and beneficiary. The terms of the trust agreement can specify how the assets of the trust are to be used, such as to provide for the basic needs of the beneficiary or to support a particular hobby or interest. This flexibility allows the settlor to customize the trust to meet their specific goals and objectives.

  1. Avoidance of Probate

In North Carolina, assets held in a trust are not subject to the probate process. This means that upon the settlor’s death, the assets of the trust will continue to held for the benefit of the beneficiary, and if appropriate at some later time, transferred to the beneficiary without the need for court involvement. This can be a significant advantage for individuals who wish to avoid the time and expense of probate.

Setting Up a Spendthrift Trust in North Carolina

Step 1: Choose a Trustee

The first step in setting up a spendthrift trust in North Carolina is to choose a trustee. The trustee can be an individual or a financial institution. The settlor should choose a trustee that they trust to manage the assets of the trust and make decisions in the best interests of the beneficiary.

Step 2: Determine the Purpose of the Trust

The settlor should also determine the purpose of the trust. This can include providing for the beneficiary’s basic needs, such as food, shelter, and medical care, or it can be more specific, such as providing for education or supporting a particular hobby or interest.

Step 3: Gather the Necessary Documentation

To set up a spendthrift trust in North Carolina, the settlor will need to work with an attorney to create the following documentation:

a. A written trust agreement: This document outlines the terms of the trust, including the purpose of the trust, the powers and duties of the trustee, and the rights of the beneficiary.

b. A list of the assets to be placed in the trust: This can include cash, stocks, real estate, or other assets.

c. A certificate of trust: This is a summary of the trust agreement that can be used to provide evidence of the existence of the trust to third parties.

Step 4: Fund the Trust

Once the trust agreement and other necessary documentation have been gathered, the settlor will need to transfer the assets to be placed in the trust to the trustee. This is known as “funding” the trust. The assets should be transferred to the trustee in a manner that is consistent with the terms of the trust agreement.

Step 5: Review and Update the Trust

After the trust has been set up and funded, it is essential to periodically review and update the trust to ensure that it continues to meet the needs of the settlor and the beneficiary. This may involve making changes to the trust agreement, adding or removing assets from the trust, or appointing a new trustee. 

Wilson Ratledge, PLLC

Working with an estate planning lawyer in North Carolina is advisable if you need to set up a spendthrift trust in the Tarheel State. We can also help you review and update the trust as per your wishes to ensure that it remains effective and in compliance with all your future aspirations.

Business Succession Planning in North Carolina

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Business succession planning is essential to any business for a number of reasons. These include:

  1. Ensuring a smooth transition of ownership and management.
  2. Maintaining continuity of operations in the event of the death or incapacity of a current owner or key executive leader.
  3. Identifying and preparing potential candidates for key leadership roles.
  4. Providing legal and financial protections for the business and its stakeholders.
  5. Contributing to the overall success and growth of the business.
  6. Ensuring compliance with relevant laws and regulations.
  7. Maintaining peace in the family.

In North Carolina, businesses must adhere to various legal considerations and requirements when engaging in succession planning. 

In this article, the North Carolina business succession planning attorneys at Wilson Ratledge will outline basic succession planning options and some of the key legal considerations.

Legal Considerations for Succession Planning in North Carolina

There are several legal considerations that businesses in North Carolina must take into account when engaging in succession planning. These include:

a. Business Structure: The type of business structure, such as a sole proprietorship, partnership, or corporation, will determine the legal requirements and procedures for succession planning. For example, partnerships may require the execution of a partnership agreement outlining the terms of succession. At the same time, corporations may need to follow specific procedures outlined in the articles of incorporation and bylaws. S corporations in particular must adhere to IRS rules regarding eligible S corporation shareholders.

b. Transfer of Ownership: The transfer of ownership in a business is subject to various legal considerations, such as the execution of a buy-sell agreement and estate planning documents (wills and trusts) to implement the terms of a buy-sell agreement, orderly transfer of business interests, and planning for minimizing, while having liquidity for, the payment of any applicable taxes. It is important for businesses to seek the guidance of an attorney when engaging in the transfer of ownership to ensure compliance with relevant laws and regulations.

c. Management Succession: The process of transferring management responsibilities in a business can also be subject to legal considerations, such as the use of key-man (or key-person) life insurance, executive compensation, the joinder in a limited liability company operating agreement or partnership or limited partnership agreement. It is crucial for businesses to consult with an attorney to ensure that the management succession process is carried out as smoothly as possible and in accordance with the law.

North Carolina and Federal Laws Governing Succession Planning

There are several North Carolina and Federal statutes, many with related regulations, that businesses and business owners must consider when engaging in succession planning and implementing a succession plan; however, none of these spell out any automatic process in the absence of planning. These include (among others):

a. North Carolina Business Corporation Act

b. North Carolina Limited Liability Company Act

c. North Carolina Revised Uniform Partnership Act

d. North Carolina General, Limited, and Limited Liability Partnerships 

e. North Carolina (wills and estates 28A-31?)

f.  North Carolina Uniform Trust Code

g. Subchapter C of the Internal Revenue Code (Federal Taxation of C Corporations)

h. Subchapter S of the IRC (Federal Taxation of S Corporations)

i.  Subchapter K of the IRC (Federal Taxation of Partnerships)

j. Federal Taxation of Trusts

k. Federal Estate and Gift and Generation Skipping Tax

Tips for Successful Succession Planning in North Carolina

Here are some tips for successful succession planning in North Carolina:

a. Start Early: It is never too early to start planning for succession. By starting the process early, business owners can ensure that there is sufficient time to determine long term goals, identify and prepare potential candidates to own and lead the business in the future, and to implement the necessary legal arrangements.

b. Involve Key Stakeholders: Succession planning should involve the input and participation of key stakeholders, such as the current owner and potential future owners, key management personnel. This will help to ensure that the succession plan reflects the needs and goals of the business and all parties involved.

c. Communicate Openly and Transparently: Communication between potential successors and beneficiaries is often key to successful succession planning. This will also help avoid potential legal disputes, such as those involving a contest of the owner’s will in the case of a family business, or those involving disgruntled key management or other personnel. 

d. Seek Professional Advice and Assistance: Engaging the services of a professional advisor, such as that of a North Carolina business attorney at Wilson Ratledge, will guide you and help you navigate the many succession plan options and their legal and tax considerations. 

e. Put the Plan in Writing: This applies to everything.  We have mentioned a few crucial documents already, and successful implementation of your succession plan requires a package of clear and consistent documents that will work together to ensure the smooth transition of your small business as part of your overall estate plan.  The documents typically required include some combination of the following:

i. Buy-Sell Agreements (also known as Shareholder Agreements or Member Agreements)

ii. Wills

iii. Trusts (there are multiple options for trusts in succession planning)

iv. Operating Agreements

v. Partnership or Limited Partnership Agreements

f. Review and Update the Plan Regularly: Succession plans should be regularly reviewed and updated to ensure that they remain relevant and reflect the current needs and goals of the business and key stakeholders.