Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

Tips for Preparing for a Small Business Loan

Posted in Corporate & Financial Services

will work for foodRequesting a business loan for your small business, whether you’re starting a new one or expanding your existing business, may seem daunting. However, there are a few small steps you can take to ensure your success in obtaining that loan.

It’s important to understand that business loans are significantly more difficult to obtain than a car or home loan because the stakes — the success or failure of your business — are much higher. Whereas cars and houses are physical assets that the lender can repossess and sell fairly easily if it becomes necessary, a business poses a much bigger loss.

If your business fails to repay the loan by the due date, all the lender can do is grant further, temporary funding in the hopes that your business will reach the point of repayment soon, restructure the loan to lessen the demands of repayment or call in the loan or foreclose on the business — none of which particularly benefit the lender. Therefore, lenders will likely require you to meet specific criteria:

1)      Good credit history. A lender can only grant a loan to someone who appears to repay money on time, and the best way to determine if failure to repay is a possibility is to review your credit history and factor in various considerations. Generally, your credit history has to be extremely good to qualify for a business loan.

2)      Equity. You have to make a financial commitment to your venture as well, to prove to the lender that it’s in your best interest to pursue the success of your business and repay your loan in a timely manner.

3)      Clear business plan. You will have to present the lender with a clearly drawn, carefully researched business plan that comprehensively describes your business and its market, demonstrates awareness of its competition, lays out employment and management plans, accounts for how the loan will be used and offers supporting documents like financial statements and credit reports. You will also need to provide estimates of your business’s cash revenue, income, summarized expenses and balance sheet.

4)      Previous experience. The more experience you have in owning or managing the type of business for which you’re requesting the loan, the better. Lenders prefer you to have at least three years of experience to be certain you can manage the loan responsibly and run the business well.

5)      Collateral. In addition to providing equity, you usually must also pledge an asset of value — up to and even more than the loan principal — as security that the loan will be completely repaid, including interest. The lender will determine the value of collateral required depending on the amount of risk assumed and the amount of any loans already in progress. Borrowers often put up property, inventory, savings or stocks as collateral.

If you approach all five of these requirements clearly and thoughtfully, you can show your lender you are well prepared to manage a loan efficiently and successfully. For further guidance on this important issue, speak with an experienced lawyer.

BoltNagi is a well-established and widely respected corporate and business law firm serving clients throughout the U.S. Virgin Islands. 

Partition of Real Estate: What if One Owner Wants to Sell, But the Other Doesn’t?

Posted in Real Estate

White Beach Chairs In Virgin IslandsPartitioning real property (as opposed to personal, financial or intellectual property) is a fairly common process that occurs when a piece of real estate, such as a building, an estate or a parcel of land, has multiple owners who no longer wish to have co-ownership. The property then has to be divided.

Often, not all of the co-owners are in agreement about what to do with the real estate. You may want to start a business in the building, build on the property or even sell it, while your co-owner does not. Usually, a property has multiple owners because it was inherited or because spouses purchased it together, so disputes like this are common. If the co-owner will not voluntarily divide the property, you have the option of bringing a partition action.

Partition options

There are two types of partitions. A “partition in kind,” or “actual partition,” separates each owner’s individual interests in the property, essentially dividing it into distinct portions, with each controlled only by one owner.

If a partition in kind is too difficult to carry out, the property may instead undergo a “partition by sale,” otherwise known as a partition by succession or licitation. In this case, the whole property is sold and its proceeds are divided among the owners.

The right to partition

Your right to partition is considered an absolute right, one that can only be limited by a provision in a will, a written waiver or the law. Even if you’ve been in a co-ownership for years, you can exercise your right to partition at any time. Courts are generally in favor of partitions and grant them willingly.

Preventing partitions

There are some situations in which you can take certain measures to avoid partition actions for a period of time. If the co-tenant agrees not to partition, particularly in writing, they may be prevented from invoking the right to partition temporarily. And if the co-tenant signed a non-partition agreement when obtaining the title to the property, that person will be held to those terms. However, a court usually will not enforce an agreement that permanently prevents the right to partition or that prevents it for an amount of time deemed to be unreasonable.

Partition acts are generally very complicated and require the involvement of the court to settle for a solution in the co-owners’ best interests. If you’re dealing with this issues, consult a skilled real estate attorney.

BoltNagi is a widely respected and well-established real estate law firm serving businesses and investors throughout the U.S. Virgin Islands.  

How to Determine if a Worker is an Independent Contractor or Employee

Posted in Labor & Employment

As a business owner, you may have to decide whether to hire independent contractors or regular employees for various positions. Both practices have their advantages and disadvantages, and are subject to very different rules when it comes to taxes.

Although you do not usually have to withhold or pay any partial taxes for independent contractors you hire, you do have to withhold income taxes, withhold and pay Medicare and Social Security taxes and pay unemployment taxes on wages for regular employees. With that in mind, it’s important to determine from the outset which category the individuals you’ve brought on are going to fall into to avoid tax issues later on.

The following information should help you determine the employment status of the people working for you:

Do you control their work?

Generally, if you have the right to direct and control when, where and how your workers go about or produce their work, no matter how much leeway you may allow them, they are considered employees. If the Internal Revenue Services tries to determine whether your workers are employees or independent contractors, the agency will examine the following specific categories of your control over them:

  • Behavioral control: This covers whether you have the right to direct how your workers perform their jobs, to control the times and locations they do it and to specify the protocol they are to follow through instructions or training.
  • Financial control: This category includes whatever control you may have over all of the business aspects of your workers’ performance, such as how and when they are paid, whether their expenses are reimbursed, who furnishes the necessary tools and supplies and what their profit, loss or investment opportunities are.
  • Type of relationship: This area takes into account how both you and your workers regard your relationship, examining the contracts or intents of both parties, the policy for termination or discharge, worker benefits (like vacation pay or insurance) and the intended continuance of the work.

Although these factors may vary depending on the business, it’s important to both consider and document all of these scenarios to make an accurate determination. If you’ve examined the evidence and are still unsure, you or your worker can file a worker status determination form with the IRS to obtain an official decision. For further guidance on this issue, consult an attorney experienced in labor law.

BoltNagi is a widely respected and well-established employment law firm serving businesses and organizations throughout the U.S. Virgin Islands.

The Importance of Filing Your Taxes — Even if You Cannot Pay

Posted in Tax & Estate Planning

tax catDuring tax time, it’s fairly common for people to realize that they don’t have the financial resources to pay the full or even a partial amount of their tax obligations. In these situations, the logical action for many is to avoid filing taxes altogether. After all, if you cannot pay the bill, what’s the point in filing?

It’s important to understand, however, that there are a number of reasons why you should file your taxes no matter your financial circumstances. The Internal Revenue Service not only charges you interest for paying late taxes, but also penalizes you 5 percent of the total amount you owe per month for up to five months. Even if you are unable to pay, at least filing your return will help you avoid this major penalty.

If you’re facing this challenge, the following options are available to you:

  • Set up an installment agreement: As long as you don’t owe more than $25,000 in combined taxes, interest and penalties and the IRS does not have records showing you haven’t filed all your past due tax returns, you are eligible for an installment plan. The IRS is willing to work with you on setting up a payment plan via installments for up to 60 months. Even if you do owe more than $25,000, you may have some room to negotiate with the IRS.
  • Request an extension for undue hardship: If you can show evidence that paying your taxes on time would cause you undue hardship, such as losing property, you may be eligible to file for a payment extension. This will give you an extra six months to pay the amount you owe. While the amount will still accumulate interest over the extension period, you won’t be charged any penalties.
  • Make an offer-in-compromise: Because the IRS would prefer to receive even a partial amount of what you owe over nothing at all, the agency may accept an offer-in-compromise (OIC). If you can convince the IRS that you are not able to pay the full amount, that your tax liability may be inaccurate or that payment in full would cause you economic hardship or unfair difficulty, the agency may accept your offer to pay only a partial percentage of what you owe.
  • Pay with credit: Although it is never advisable to incur debt, the interest rate on a personal bank loan, home equity loan or even your credit card may be less than the interest and penalties the IRS may impose on you for late taxes.

No matter your situation, it’s always safer and more responsible to file your tax return and follow one of the above methods than to jeopardize your future by missing the deadline.

BoltNagi is an experienced and widely respected tax planning law firm serving clients throughout the U.S. Virgin Islands.

DHHS Clarifies Affordable Care Act Issue for US Territories

Posted in Community Affairs

BanksyRecently the federal government announced that certain provisions of the Affordable Care Act would no longer apply to U.S. territories — most specifically the requirement that insurance companies must offer coverage to all individuals. The decision related to the Public Health Service Act’s definition of the word “state.” Under the PHSA, the provisions of the health care law only apply to states, and territories are exempt.

For months, U.S. territories have grappled over the provisions of the ACA and how it applied to them. Previously, the law was read to require insurers to provide health insurance coverage to all residents, regardless of previous conditions, but did not impose a mandate on all residents to purchase insurance. This resulted in a larger percentage of unhealthy individuals buying policies, thereby increasing costs for insurance companies that rely on healthy individuals’ premiums to offset the cost.

Now, with the new reading of the ACA, insurance companies are no longer obligated to offer coverage to all residents of the territories and could discriminate against individuals based on their health, a practice the ACA was meant to curb. This means that insurance rates for unhealthy individuals will likely go up. Whereas previously people could purchase identical policies regardless of health, insurers may now bar certain individuals from purchasing policies and are exempt from providing fair health premiums.

Insurers also no longer must offer certain services, such as essential health benefits, another mandate of the ACA. This includes ambulatory services, emergency services, maternity and newborn care, hospitalization, mental health and addiction services and prescription drugs.

Certain provisions of the ACA will still apply to insurance companies in the U.S. territories, including the disallowance of bans on annual or lifetime benefits. Additionally, insurers must provide coverage for preventative care. The changes will go into effect over the next several months, although insurance companies do not have to repay any grant funds that have already been spent. All unspent grant money must be returned.

BoltNagi is a well-respected and established government relations law firm serving clients throughout the U.S. Virgin Islands.

How to Decide Who Should Have Your Health Care Power of Attorney

Posted in Tax & Estate Planning

old manChoosing your health care power of attorney is an incredibly important decision, as the person you authorize­­ — known also as an agent — will be able to make important decisions on your behalf if you can no longer communicate or become medically incapacitated, as in the instance of a coma.

When it comes to choosing a health care agent, individuals often choose people they know and are close to, such as spouses, partners, close friends, siblings or relatives. When engaged in this aspect of estate planning, it’s important to choose someone with whom you feel comfortable discussing your plans and wishes for medical treatment and who may already have knowledge of your medical history.

How much power does your health care agent have?

Although your health care agent may not agree with your medical plans entirely, they are legally obligated to carry out your wishes, so it always helps to choose agents who will respect your beliefs even if they have conflicting feelings themselves.

Because these medical decisions may become complicated and emotional, it’s important to keep the following considerations in mind when choosing who you would like to authorize with your health care power of attorney:

  1. Is the person located nearby? It is not mandatory that your health care agent live on the same island or area as you, but they may have to be on constant call if you contract a long-term illness to help ensure your physicians follow your medical wishes.
  2. Is the person confident and assertive? Occasionally, your health care agent may have to carry out your wishes in the face of conflicting opinions from your friends and family members and medical staff.
  3. Are you naming a separate financial agent? It’s somewhat common for agents authorized separately with power of attorney for health care and finances to run into conflicts, so it might be a good idea to authorize the same person for both powers.
  4. Are you naming an alternative agent? Strongly consider naming a back-up health care agent, whom you also trust, in case your current agent resigns, passes away or becomes incapacitated.
  5. Are you naming a health care provider as your agent? To prevent bias, it’s recommended that you avoid naming a doctor or employee of a health care organization as your agent, unless you are married or related to that person.

Above all, your health care agent should be someone you trust to carry out your wishes as fully and precisely as you’ve outlined. Make sure you prepare ahead of time and cover all possible scenarios with this important individual.

BoltNagi is a respected estate planning law firm serving individuals and families throughout the U.S. Virgin Islands.

The Dangers of Prepackaged Wills and Trusts

Posted in Tax & Estate Planning

family willIn our do-it-yourself era, prepackaged wills and trusts may seem like an incredibly convenient option for individuals and couples not wanting to add extra stress to an already emotional process. However, most legal professionals strongly advise against using them. If your will or trust doesn’t meet specific requirements, your wishes may not be carried out to their full extent, or at all.

The following are seven solid reasons why prepackaged wills and trusts might not work out well for you and your loved ones:

1)      Inaccurate language: These documents are unlikely to use the correct language or uphold the signing requirements necessitated by your state or territory. Only an attorney who focuses on estate planning in your area can truly advise you on your legal obligations.

2)      Poor communication: Because they operate by a pre-set language and formula, prepackaged wills and trusts are unlikely to effectively or properly communicate your wishes in full.

3)      Inadequate oversight: It’s common for prepackaged wills and trusts to lack the signatures, witnesses and notarization required by law. Often, unauthorized people are the witnesses, a mistake that renders the documents invalid.

4)      Outdated planning: Estate laws change fairly often, so a prepackaged will or trust you purchase one year may be totally invalid the next.

5)      Invalidating mistakes: Courts are required to interpret a will by the plain meaning of the words it contains, which means that any typos, confusing clauses or incorrect terminology may completely alter the meaning of your will. This could change the way it will be carried out after you pass on.

6)      Insufficient wiggle room: Prepackaged wills and trusts don’t have the room or foresight to account for the many extenuating circumstances your estate could encounter, such as personal issues, sibling rivalries, difficult family finances or tax problems.

7)      Lack of maintenance: It’s important to regularly review and maintain your estate documents over the course of your life, a process that prepackaged wills and trusts generally do not allow for.

Any of these difficulties, which you are likely to run into when taking advantage of the convenience that prepackaged wills and trusts claim to offer, run the risk of destroying your original intent behind the will, denying your heirs their rightful inheritance and improperly handling or mismanaging your estate and assets. All of these issues may be avoided simply by obtaining the services of an experienced estate planning attorney who practices in your state or territory.

When it comes to your will, which is one of the most important documents you’ll ever develop and sign, there’s no substitute for the real thing. Speak with a qualified attorney in the U.S. Virgin Islands to assist you with the estate planning process.

U.S. Virgin Islands Could See Tourism Boost with U.S. News Ranking

Posted in Community Affairs

hammockThe U.S. Virgin Islands Tourism Department recently announced that the Territory, which consistently ranks highly on the U.S. News & World Report’s “Best Places to Visit in the Caribbean”, has topped the list this year.

U.S. News & World Report recognized the many amazing natural and cultural features the U.S. Virgin Islands has to offer tourists, from the pure white sand beaches of St. John to the vibrant cultural history of St. Croix to the exhilarating festivities of the carnival celebrations throughout the Virgin Islands. The coveted number one spot was occupied last year by the Cayman Islands, which now finds itself in second place, followed by St. Kitts and Nevis.

The “Best Places to Visit in the Caribbean” list is solidified in a highly selective process, in which U.S. News & World Report sends travel editorial staff all over the region to assess recommendations made by travel experts and investigate new travel possibilities. This year, the staff examined more than 200 destinations, choosing only a handful to receive the honor.

Although the chosen destinations, including the U.S. Virgin Islands, are widely known for their beautiful beaches and relaxing atmospheres, the list strives to evaluate a number of other features, such as colonial history, dynamic lifestyles, healthy economy, lush parks, cultural attractions and vibrant cuisine. America’s Paradise leads the region in offering these various amenities and opportunities.

The U.S. Virgin Islands is already a major port for cruise lines in the Caribbean, so the award will continue to inflate the steadily growing stream of visitors. The news coincides nicely with this summer’s Virgin Islands Nice promotion, designed by the Tourism Department to offer world-class features to the region’s new tourists. The agency’s efforts likely contributed to the honor for the territory this year.

The U.S. Virgin Islands came in fifth on the list last year, and this is the first time it has been named the number one destination to visit in the Caribbean. U.S. News & World Report has also named the Territory number 10 on the “Best Places to Visit in the United States” list and number 11 on the “Best Places to Visit in the World” list. These achievements mean local businesses will likely see an exciting influx of new travelers and visitors seeking the natural beauty and thrilling cultural experiences here in the U.S. Virgin Islands.

BoltNagi is a well-established and widely respected government relations law firm serving clients throughout the U.S. Virgin Islands. 

Police, Fire Retirements May Stress Public Services in US Virgin Islands

Posted in Community Affairs, Government Relations

During recent budget hearings before the Finance Committee of the Legislature of the Virgin Islands, police and fire officials alerted the Virgin Islands Senate that their agencies, chronically understaffed already over the last few years, may be in even worse shape in the coming months and years.

According to the officials, an unprecedented number of Police Department and VI Fire Services employees will soon be eligible to retire or are retiring already. This is resulting in losses that could well decimate the departments’ number of employees. Nearly 150 officers are eligible to retire in the next two years, raising serious concerns with the Police Commissioner as to the remaining force’s ability to maintain order and safety throughout the Territory.

Calling all recruits

This is just the latest assessment of an ongoing issue, raised last year in the Senate’s budget hearings by the Police Commissioner. In 2013, the Department was already concerned about the rising retirement eligibility of its officers, citing a loss of more than 100 employees since 2007. At the time, the Police Commissioner Rodney F. Querrard detailed ongoing recruitment efforts, which have proven of great help but still have not provided the necessary re-staffing necessary.

The problem, as detailed in the most recent budget hearing, is mainly that the new recruits are primarily coming through in the area of personnel staff, leaving a gaping hole in supervisory personnel. To address this particular shortage, the Police Department is working to implement step raises for the supervisory staff it so desperately needs, measures that were approved just a few years ago in the 2010 Law Enforcement Supervisors Union contract.

Overlap in services

The increasing retirement eligibility, combined with what appear to be falling rates of enrollment in the U.S. Virgin Islands Police Academy, is not the only issue detracting from the forces’ numbers. Shortages in personnel may also be due to an overlap between the USVI Fire Services and the Virgin Islands National Guard Reserves. Although the St. Croix district could lose just one fire personnel member this year to service in the VING Reserves, the St. Thomas/St. John District stands to lose 17 officers.

Four of the firefighters have already received confirmation of their deployment later this year, necessitating overtime costs on behalf of the VI Fire Services to meet minimum staffing levels. Fortunately, despite the budgeting difficulties that have come about, the Police Department reported that crime rates have decreased.

BoltNagi is a well-established and widely respected government relations law firm serving clients throughout the U.S. Virgin Islands. 

Understanding Copyright, Trademark and Other Intellectual Property Issues in the U.S. Virgin Islands

Posted in Litigation

Copyright-_all_rights_reservedIt’s easy to confuse copyrights, trademarks, service marks, patents and other intellectual property protections, but they all serve quite different purposes. To effectively safeguard your work and the intellectual property that keeps your business ahead of the competition, it’s important to know the differences between these protections and which one is appropriate for your needs.

Below we have provided a brief overview of each:

Copyrights

A copyright is a type of intellectual property protection, registered by the Library of Congress’ Copyright Office, afforded to the authors of original works of authorship expressed in a tangible medium, such as musical, artistic, literary, dramatic and other works. A copyright gives you (and no one else) the exclusive right to distribute copies or recordings of your work, to perform or display your work publicly, to reproduce your work and to prepare any further works derived from the original.

A copyright does not protect the subject matter of your work, so others can base their own original work on yours. The copyright only protects your specific form of expression.

Patents

A patent, issued by the Patent and Trademark Office, awards the property rights of an invention to the inventor for 20 years from the date of the patent application. Patents exclude other parties from constructing, using, importing, selling or offering to sell the invention themselves.

Trademarks and service marks

A trademark or service mark, also registered with the Patent and Trademark Office, is used in the trade of goods to indicate the source through an identifying symbol, name, device or word. Trademark rights ensure that the makers of similar goods cannot package those goods with a mark similar to your own.

The Uniform Trade Secrets Act

The U.S. Virgin Islands has also adapted the Uniform Trade Secrets Act, which was enacted by the U.S. a few decades ago to better protect the trade secrets of American companies that, because they operated in multiple states, were more vulnerable to an exposure of their trade secrets.

The Trade Secrets Act established a uniform trade secret law to deal with any uncertainty associated with a patent, while allowing each state and territory some flexibility with its text. In short, it protects your patent and trade secrets by providing a framework for legal recourse if another company obtains, uses or tries to acquire your protected works.

Although it’s very clear when a patent is appropriate, it may occasionally be difficult to determine whether you need a copyright or a trademark for your work. In these situations, seek the assistance of a skilled intellectual property attorney.

BolgNagi is a widely respected and well-established intellectual property and civil litigation law firm that serves clients throughout the U.S. Virgin Islands.