Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

Checklist for Your Estate Plan after a Major Life Event

Posted in Tax & Estate Planning

Anytime you go through a major life event or milestone, it is important you review your estate plan to ensure it is up to date and properly reflects your current life circumstances and goals. Whether it’s a marriage, a divorce, the birth of a new child, a new job or a big move, anything that you would classify as a significant adjustment to your life should prompt you to take another look at your estate planning documents.

The following is a quick checklist of reviews and changes you may need to make to your estate plan after a major life event:

  • Alter your will: Some events will cause you to want to make changes to your will. Examples include the death of a beneficiary, the birth of a new child, a marriage or divorce, the purchase of new (and valuable) property or the launch, purchase or sale of a business. Your will gives you the ability to leave property to chosen beneficiaries in the manner of your choosing.
  • Policy and account beneficiaries: Any insurance policies or accounts you have that require you to list a beneficiary-such as a life insurance policy or retirement account-should be up for review if you either get divorced from your chosen beneficiary or if a beneficiary passes away.
  • Guardianships: Whenever you have or adopt a child, it is important you review your will and add guardianship stipulations. This ensures your child will be protected and cared for according to your wishes in the event of your passing.
  • Business succession: Many business owners include succession plans in their estate planning arrangements. If circumstances have changed among your partners or if your chosen heir to your business is either no longer interested or available, it is time to revisit your documents and make some changes.
  • Estate executor: Your executor should be someone you trust completely to be organized and get the job done according to your wishes. If your executor passes away or if changing life circumstances make you feel someone else would be better suited to the role, then you should make those changes as soon as possible.

For more information on reviewing and making changes to your estate plan after a major life event, meet with a skilled estate planning lawyer in the U.S. Virgin Islands.

 

Steven K. Hardy concentrates his practice in estate planning at BoltNagi, a widely respected and established estate and trust planning law firm, serving clients throughout the U.S. Virgin Islands.

Checklist for Selling a Business in the US Virgin Islands

Posted in Corporate & Financial Services

After you and the buyer of your business have completed negotiating your purchase, it’s time to prepare for closing. By following some simple steps, you will be well prepared to sign on the many dotted lines involved in these transactions.

The following is a checklist for selling your business in the U.S. Virgin Islands:

Before closing day

  • Schedule the closing (ideally, your closing appointment should be early enough in the day to allow parties to get to banks and government offices afterward)
  • Finalize the purchase price; it should reflect all your negotiations and agreements
  • Prepare corporate documents, tax forms and equipment sale lists; get organized with all the documents you will need to have on hand at closing
  • Prepare to transfer all contracts and agreements
  • Prepare your loan documents (these documents could include promissory notes, security agreements, financing statements and various guarantees)
  • Prepare to transfer your business lease
  • Inventory and prepare to transfer all work that is currently in progress
  • Prepare the bill of sale
  • Prepare the closing sheet (this lists the purchase prices and all the costs that will be paid by or credited to the buyer and seller)
  • Prepare the purchase and sale agreement
  • Prepare succession agreements

On closing day

  • Review and sign the purchase and sale agreement
  • Review and sign all the loan documents on hand
  • Review and sign all documents for lease transfers, vehicle ownership transfers, franchising, succession and any other documents involved in transferring your business and its assets to the new owner (s)
  • Review and sign the bill of sale
  • Review and sign all non-compete, employment and consulting agreements
  • Review and agree to the closing sheet
  • Review and sign all forms that transfer patents, copyrights, trademarks and intellectual property
  • Review and sign any IRS forms, asset acquisition statements and other such documents
  • Receive the payment for the purchase price-either in full or for a significant down payment, depending on the terms you have already negotiated with the buyer for payment

To learn more about what you can expect out of the sale of a business and closing day, contact a trusted corporate planning attorney in the U.S. Virgin Islands.

 

Tom Bolt is Managing Attorney of BoltNagi, a widely respected and established business and corporate law firm that serves clients throughout the U.S. Virgin Islands.

Covering All Your Legal Bases When Selling a Business

Posted in Corporate & Financial Services

Selling a business is a major undertaking both in terms of the logistical elements and because of all the legal issues you must consider. The following are just a few of the legal challenges that could arise during the sale of a business:

  • Issues with unpaid tax, especially property tax;
  • Dealing with outstanding debts;
  • Issues with business succession;
  • Handing confidential information, such as trade secrets, copyrights and employee information; and
  • Continuing a relationship with previous business contacts, vendors and partners.

It is important to note that just because a business gets sold does not mean that it will close its doors. A retiring business owner may choose to sell a company to a business partner, friend or relative under the condition that it continues to operate in the months and years to come.

No matter the circumstances of the sale, however, you must fulfill certain filing requirements. All the parties involved in the sale must file with local authorities to inform them of the change in ownership, and additional papers may be required for the sale to be approved.

In some cases, you may have to go through additional steps for the sale of the business to be official. The local government could send an inspector to examine the business property before the final sale occurs, and if they uncover any violations, it could be the responsibility of the new owner to address them. An example of such a violation would be the use of toxic materials in the building. If the seller is aware of this issue, it is his or her responsibility to inform the buyer before the sale is finalized.

How an attorney can help

Without the assistance of an experienced corporate law attorney, the sale of a business becomes nearly impossible to navigate in a smooth and legally compliant manner. Every sales contract is different, which means you need a knowledgeable professional on your side to guide you through the process and teach you about how the law affects your situation and goals.

A business law attorney can help you throughout all phases of a business sale, drawing up the contracts and ensuring all elements of the transfer comply with the law. Buyers of a company may also greatly benefit from working with attorneys, as their knowledge and experience will prevent buyers from signing their name on a deal that is one-sided or otherwise unfair.

It is important to comply with all federal and U.S. Virgin Islands territorial rules regarding the sale of a business. If you have any questions about the steps you need to go through to sell your company, work with a skilled commercial transaction lawyer.

 

Nash Davis is a member of the Corporate, Tax & Estate Planning and Real Estate and Financial Services Practice Groups at BoltNagi, PC, a respected and established business and corporate law firm serving clients throughout the U.S. Virgin Islands.

‘Means Test’ Determines If You Are Eligible to File for Chapter 7 Bankruptcy

Posted in Corporate & Financial Services

How do courts determine who is and is not eligible to receive a bankruptcy discharge under Chapter 7? The answer is the “means test,” a simple way of determining whether one’s income level is low enough to qualify for a discharge. People who do not pass the means test may still be eligible to file for Chapter 13 bankruptcy and arrange a repayment plan, but will not be eligible to eliminate their debts under Chapter 7.

You do not necessarily have to be completely penniless to qualify for Chapter 7 bankruptcy. Even if you earn a significant monthly income, you could still qualify if your expanses and debts vastly outweigh that income.

How the Chapter 7 means test works

The means test exists to limit the ability to receive a Chapter 7 bankruptcy discharge to only those who need it the most. Through the means test, you deduct certain monthly expenses from your current monthly income, which is determined by the average income you earned over the previous six months. The resulting figure is your “disposable income.” The lower your disposable income, the better chance you’ll have at securing a Chapter 7 bankruptcy discharge.

The only people who file for bankruptcy who need to take the means test are those who have mostly consumer debts versus business debts. When taking the means test, you will first determine if your income is higher or lower than the median figure in your area.

If you earn less than the median income, then the test is over—you may file for Chapter 7 bankruptcy. If you earn more than the median, however, you may not be eligible to file for Chapter 7 if you would have enough disposable income to repay some of your debts. If your level of disposable income reaches a certain amount, you will fail the means test and may need to file for Chapter 13 bankruptcy instead.

The target median income level for your specific case depends on the size of your household and where you live.

Passing and not passing the means test

Even if you pass the means test, you still may need to determine if filing for bankruptcy is the right decision for you. Passing the test simply means that you are legally able to receive a discharge of your debts. You should first consider all the alternatives available to help you determine what the best path forward is for you.

If you do not pass the Chapter 7 means test and still wish to file for bankruptcy, Chapter 13 is an option. Under Chapter 13, you can pay off at least some of your debts via a court-sanctioned repayment plan, which typically lasts between three and five years.

To learn more about bankruptcy and its alternatives, consult a trusted U.S. Virgin Islands financial services attorney.

 

Tom Bolt is Managing Attorney at BoltNagi, a respected and established financial services law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Checklist for Starting a New Business in the US Virgin Islands

Posted in Tax & Estate Planning

Owning your own business can be extremely rewarding, but getting it started is often a daunting prospect. Our team of experienced business attorneys has assembled a simple checklist of the steps you need to take to get your new company up and running.

Below are the key steps to start your new business in the U.S. Virgin Islands:

  • Create your business plan: Your business plan will be the general overview of how you plan to build your new company. It contains information such as a description of your company, a market analysis, marketing and sales information, how your business will be organized, necessary funding, financial projections and how your business will stand out in the market.
  • Choose a location: If your business needs a physical location, such as an office or retail space, select a customer-friendly spot and make sure it complies with zoning requirements.
  • Seek financing: Take out loans, apply for grants and seek investors and venture capital to get the money you need to begin your operations. Note that almost anyone who gives you money is going to want to see a detailed business plan, again highlighting the importance of that first step.
  • Determine your business structure: Will you establish your business as a partnership, sole proprietorship, LLC, corporation or S corporation? The structure you choose will have a considerable impact on numerous areas of your operations.
  • Register the name of your business: You will need to register your business name with the Corporate and Trade Name Division of the Office of the Lieutenant Governor.
  • Register for taxes: Obtain a tax identification number, along with various insurance policies, such as workers’ compensation, disability and unemployment.
  • Obtain business licenses: Get all the licenses you will need to operate your company. There are both territorial and federal regulations you will need to consider to determine which permits and licenses are needed.
  • Begin hiring employees: If you will be bringing on employees immediately, make sure you understand all the legal steps you must follow to hire them.
  • Seek assistance: Get in touch with our local Small Business Administration office to find out how the agency can assist you. You should also constantly take advantage of free training and counseling services, both during the business formation process and after your business has officially launched. There are numerous programs available to help startups and small businesses find their footing and eventual success in their markets.

These are just a few of the most important steps to take as you start your new company. For more information on what tasks you need to accomplish while starting your new business, contact a skilled U.S. Virgin Islands business law attorney.

 

Steven K. Harday is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, a widely respected and well-established business law firm serving clients throughout the U.S. Virgin Islands.

How Does Durable Power of Attorney Work?

Posted in Tax & Estate Planning

A durable power of attorney is one of the simplest and most reliable ways to allow someone else to manage your finances if you are incapacitated and unable to act on your own accord. If you do not arrange for durable power of attorney, it’s likely your family will have to go to court to be able to take control of your finances. This can be a messy, time-consuming and expensive process.

You may grant power of attorney to your chosen agent to allow that person to act in any of the following ways:

  • Buy, sell, pay taxes on or maintain any property you own
  • Invest your money into stocks, bonds or mutual funds
  • Use your assets to pay your bills and other everyday expenses
  • Purchase or sell insurance policies and annuities
  • Collect Medicare, Social Security or other government benefits
  • File and pay your income taxes
  • Operate certain aspects of your small business
  • Handle transactions with any financial institutions with which you have an account
  • Hire an attorney to represent you in court
  • Manage your retirement accounts
  • Claim property you inherit or to which you are otherwise entitled

When does financial power of attorney take effect?

You have some options when it comes to your power of attorney arrangement. You may draft the document so that it goes into effect immediately after being signed. In this case, you should specify you wish your power of attorney to be “durable,” meaning it will stay in effect if you become incapacitated.

You may also draft your power of attorney to go into effect only upon your incapacitation, in what is known as a “springing” power of attorney arrangement. This keeps all your financial affairs solely in your control unless you are unable to handle them in certain circumstances. You may outline these circumstances when you draft the document, as well.

When does financial power of attorney end?

A durable power of attorney arrangement will automatically end upon your passing. At that point, your agent no longer has the authority to handle your financial matters unless he or she has also been named the executor of your estate, which is an entirely different responsibility for which you must arrange in your estate plan.

Durable power of attorney may also end in several other situations, including:

  • You revoke it: You may revoke durable power of attorney at any time, so long as you are of sound mind to do so.
  • You get divorced: In some circumstances, if your spouse is your agent, his or her power of attorney is automatically revoked when your divorce is finalized. You should double check with the court to make sure this is the case, however.
  • The court invalidates your arrangement: A court may declare a power of attorney document to be invalid in some circumstances, such as if you lacked the required mental competence to sign it or if you were a victim of undue influence or fraud.
  • Your agent cannot be found: If your agent is unavailable for any reason, your document could be found invalid. You should name an alternate agent to prevent this problem from arising.

 

For more information on granting power of attorney, work with an experienced U.S. Virgin Islands tax and estate planning attorney.

 

J. Nash Davis is an Associate Attorney in the Corporate, Tax & Estate Planning Practice Group at BoltNagi, a widely respected and well-established trust and estate planning law firm assisting clients throughout the U.S. Virgin Islands.

Protecting Your Business and Personal Devices in the Wake of WannaCry

Posted in Corporate & Financial Services

A major cyberattack recently hit about 200,000 computers across more than 150 countries, with an especially considerable effect on individuals with older computers and operating systems, as well as large organizations and universities.

The attack was performed via malware that has since become known as “WannaCry,” which was created and published by a hacker group called Shadow Brokers. It developed the malware from tools that were originally created by the U.S. National Security Agency— one of the reasons it was so effective.

In the attack, the system would lock down certain files and then demand $300 in Bitcoin, a digital currency, within six hours to receive instructions to restore those files. The attack resulted in more than $40,000 being paid out, according to Bitcoin transaction tracking company Elliptic. The hackers have not yet been caught.

Mitigating the impact of a potential attack

In the wake of such an event, it is important to remind all users of the importance of digital and device security. Below are a few steps you can take to protect all your personal and work devices and the information stored on them.

  • Back up all data: You should make regular backups of all your files, data and programs. At least once a month is a good baseline, but weekly is a better option to ensure you will not lose too much in the event of a ransomware attack.
  • Make regular updates to antivirus software: New malware is constantly being created to exploit vulnerabilities in networks and devices. Thus, antivirus software must regularly be updated so your computer is able to address any potential viruses that attempt to attack it. Microsoft and other large software companies also release patches for other programs that address known vulnerabilities.
  • Regularly update your operating system: Windows, for example, has regular updates it releases. If you get a message on your computer telling you there is a new update and you must restart to install it, do not delay for long—these updates are critical for preserving the security of your computer and all the data on it. If you are using an older operating system, continue updating to a new one to ensure you have access to the security features and updates you need to stay protected. Windows 8.1, for example, will have limited support as of January 2018, making an upgrade to Windows 10 highly advisable.
  • Have processes in place to address cyberattacks: It is important to be prepared for any cyberattack that could affect you or your business. Have a company-wide policy that addresses steps to take in the event of an attack, and make sure your employees are familiar with them.
  • Consider security of outside partners or vendors: Even if you are not directly hit by a cyberattack, your company could still be affected if one of your key suppliers or vendors becomes a target. When looking for such partners, make sure they are prepared to handle any potential cyberattacks.

If you have any questions about cybersecurity and the legal liability associated with it, consult a dedicated attorney in the U.S. Virgin Islands.

 

Ravinder S. Nagi is Assistant Managing Attorney at BoltNagi, a respected and well-established intellectual property and business law firm that serves clients throughout the U.S. Virgin Islands.

Federal Lawmakers Look to Repeal Estate Tax

Posted in Tax & Estate Planning

Throughout the 2016 campaign, then-candidate Donald Trump repeatedly voiced his distaste for the estate tax, which he and the others who oppose it have taken to calling the “death tax.”  Although no legislation to repeal the tax has been proposed in Congress over the past few months, it certainly seems likely that lawmakers will try to move forward with a measure sometime soon.

The “death tax” pejorative refers to the idea that the tax is effective upon the death of the estate owner. Critics of the estate tax say this essentially means that people’s estates lose money simply because they pass away, unfairly preventing their heirs from inheriting the full value of those estates.

It’s worth noting that the estate tax affects only a small percentage of wealthy American families, and contrary to some criticisms, it has no discernible impact on most owners of small businesses.

According to data from the Tax Policy Center, there are only about 20 small businesses and farm estates in the country that paid any estate tax in 2013. Those that were affected paid an average rate of just 4.9 percent of the estate’s total value.

President Trump has said that “a lot of families go through hell over the death tax,” but additional information from the Tax Policy Center reveals that there were only about 4,700 total taxable estates in 2013. To that end, approximately one in 550—out of the 2.6 million people who died that year—had to deal with the estate tax at all.

In addition, approximately 90 percent of the amount of money collected from the estate tax is paid by the top 10 percent of income earners, with the richest one-tenth of a percent paying more than 25 percent of all estate taxes. As one can see, it’s an issue that largely is only relevant to the very wealthy.

What happens if the estate tax is repealed?

President Trump has already hinted to his plans if the estate tax were to be repealed. Under this plan, beneficiaries would pay a capital gains tax on any assets they sell based on the original cost of those assets. In some circumstances, this tax could be quite low. If, for example, someone purchased a share of Apple stock at a low price years ago, and that stock is now worth significantly more, the tax would still be based on the original price.

Therefore, while there is a slight trade-off involved, wealthy people currently affected by the estate tax would likely come out paying less under Trump’s plan.

The problem proponents of the estate tax have with this is that the tax affects so few people that repealing it does not make much sense. The tax currently generates extra revenue without the need to implement more taxes on lower- and middle-class Americans.

If you are interested in how a repeal of the estate tax could affect you, your business and your estate planning process, meet with a skilled U.S. Virgin Islands estate planning lawyer.

 

Steven K. Hardy is Chair of the Corporate, Tax & Estate Planning Practice Group at BoltNagi, a respected and established tax and estate planning law firm serving individuals and businesses throughout the U.S. Virgin Islands.

Business Leaders Push Trump Administration for Quicker Approvals, Simpler Regulations from EPA

Posted in Government Relations

Various industry groups in the United States are pushing The Trump Administration for a faster permit process and simplified environmental regulations.

Many of these groups are associations representing industries such as drilling, mining, refining and building. These associations have submitted hundreds of pages of documents to the Environmental Protection Agency (EPA) and the U.S. Commerce Department, outlining certain regulations they wish to see either eliminated entirely or at least significantly modified.

The EPA has been the target of most of these suggestions. President Trump has already signed executive orders in just his first few weeks in office geared toward cutting regulations that he believes to be a burden on certain industries. Many Obama-era protections to the environment have been rolled back or eliminated, including those geared toward combating climate change. Most recently, Trump backed out of the Paris Climate Accord in a move he justified as being beneficial for American businesses.

The reforms implemented on EPA regulations have been the subject of public debate, with many individuals and groups regarding the proposed (and implemented) rollbacks as possible threats to public health and the environment. However, many business groups have embraced the plans to boost growth across numerous industries.

The focus among industry groups

Numerous industry organizations have been focused on making the permitting process for installations and facilities easier. For example, some have pushed for the Trump Administration to decline a previously planned tightening of ozone rules laid out in the U.S. Clean Air Act’s National Ambient Air Quality Standards. Opponents of these stricter regulations claim they would make it difficult to implement new operations and facilities.

Other groups have said that certain requirements under the Clean Air Act as being redundant and unnecessary. These include the Maximum Achievable Control Technology rules, New Source Performance Standards and the National emissions Standards for Hazardous Air Pollutants.

According to a representative from the National Association of Manufacturers, industry groups had one proposed change that would have replaced eight different regulations with one that achieves the same result environmentally, but at a reduced cost for compliance.

On the other hand, environmental groups and others have voiced their concerns regarding how such changes could undermine environmental protections. The EPA’s official comment period for these proposals ended May 15.

Business groups will continue to push for fewer regulations under the new administration, and the administration appears to be willing to listen. There is the potential for growth in some industries, but businesses and individuals in others may wonder what sort of environmental impact these changing regulations could have.

 

Tom Bolt is Managing Attorney at BoltNagi, a widely respected business and government relations law firm focused on serving clients throughout the U.S. Virgin Islands.

How to Conduct Due Diligence When Buying a Business

Posted in Corporate & Financial Services

As you prepare to purchase a business, you must perform due diligence when it comes to reviewing and researching all available information related to that company. The goal with this research is to ensure you will not be surprised by any financial or legal issues if you decide to go through with the deal.

Below are some of the specific considerations that you should focus on while conducting due diligence:

Finances

Review all the audited financial statements you can get your hands on. You should also carefully analyze balance sheets, cash flow statements and income statements, along with any tax returns filed within the last five years.

In reviewing all these documents, you should be able to determine whether the business was collecting its accounts receivable in a reasonably timely manner, if it was paying off its debts, the kind of margins it was running, how much bad debt the business was writing off and whether there were any outstanding liens on the company, among other issues.

Legal issues

Analyze all the company’s professional and consulting agreements, licenses, permits, insurance policies, lawsuit-related documents and any documents related to intellectual property. It’s important to be sure all existing agreements are enforceable, that the company has the rights to its intellectual property, that the business has been appropriate insured and that all licenses and permits are current.

It is also good to get a heads up about any pending legal action involving the company.

Structure

The structure of the business could affect your decision to purchase it. If it is a corporation, for example, you should ask for a copy of the bylaws, articles of incorporation and meeting minutes from shareholder or board meetings. You specifically want to make sure the business complies with all regulations relating to its structure, that the business structure is in line with your plans for the company and if you will need to buy out any shareholders after making the deal.

Employees

Get copies of employee handbooks, agreements, wage information, benefits plans, non-compete or non-disclosure agreements and any other contracts the company has with its employees. You should be on the lookout for any ongoing disputes with employees or whether existing policies make it more likely that employees will sue the company at some point. 

Operations

Get lists of all customers, vendors and suppliers, along with any operations manuals the company might have. Using this information, you can consider the types of inventory systems the company has implemented, the diversity and growth potential of its customer base, the type of equipment and infrastructure the company has in place and how much diversification is in the company’s supply chain.

For further guidance on due diligence before buying a company, work with a skilled U.S. Virgin Islands corporate planning attorney.

 

Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, an established and respected business law firm serving clients throughout the U.S. Virgin Islands.