2015_curtainThe process of buying a home in the U.S. Virgin Islands often comes with uncertainty and emotional ups-and-downs, as well as numerous questions and concerns related to mechanics of a closing in “America’s Paradise” and the financial aspects of the transaction. So when it’s finally time to close the deal, it might be tempting to let excitement and relief take over a little too early, at a time when taking a microscope to all aspects of the real estate deal would actually be in your best interest.

One of the best protections buyers have is the ability to draft and include contingencies in the purchase contract, which require that certain conditions must be met by the seller or the buyer during the period between the signing of the contract and the final closing. These contingencies must either be met or removed to avoid either party calling off the deal, or the deal must be renegotiated. The following are some of the most common contingencies to look out for:

  • Buyer’s inspection contingency: This contingency is very common, and a smart buyer will almost always insist upon its inclusion in the contract. Requiring that the house pass muster in the eyes of professional inspectors is a necessity to ensure all aspects of the home — including the roof, electrical work, AC system, plumbing, foundation, floors and more — are in good and safe physical condition. Separate inspections for pest infestations, natural disaster hazards and environmental hazards like mold or asbestos may also be included. Ultimately, having this contingency in the contract protects the buyer from being unexpectedly saddled with an unsound home or responsible for major repair needs that the seller failed to disclose.
  • Financing contingency: A financing contingency protects the buyer in the event that a projected loan happens to fall through. A significant part of many financial contingencies is that the buyer will be able to get back his or her earnest money — typically anywhere from 1% to 5% of the sale price, and put down as an indicator of seriousness — should the loan fail to be approved. Avoiding this financial risk may be in your best interest, although some buyers forego including a financing contingency if they’re confident their loan will go through or are competing with other potential buyers.
  • Insurance contingency: This may be surprising, but some insurance companies have been known to reject applications from homebuyers in locations with a high risk of natural disasters, severe weather damage and proximity to toxic sites. It may be wise to include a contingency that allows the purchase to be completed only if you’re able to apply for and receive homeowners’ insurance.

If these contingencies are not already in the contract, look into adding them. As buying a home is a complex legal process, having an experienced attorney look over your contract is one of the best decisions you can make during the real estate purchasing process. This will help ensure you’re in the best position possible as the transaction moves forward.

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

2015_stxThe latest economic reports indicate that the summer tourist season in the U.S. Virgin Islands for 2014 was among the strongest in recent memory. This is good news for the territory, following a winter tourist season in which activity actually declined 0.9 percent compared to the same period the year before. The summer numbers, however, reveal a jump of 7.6 percent over the summer of 2013, bringing this year’s overall numbers to nearly 1.5 million cruise visitors and more than 560,000 stopover tourists, both of which represent 3 to 4 percent increases over last year.

As tourism remains the prime contributor to the USVI economy, this news is being met with much enthusiasm, and there are additional plans to expand the industry’s growth in the territory. Particularly since the 2012 closure of the Hovensa oil refinery, the U.S. Virgin Islands has become increasingly dependent on tourism as the primary driver of the economy. Whereas the tourism industry once employed about a third of the territory’s labor force, that number has now risen above 50 percent. Marketing efforts across the United States, the construction of new resorts and the addition of flights from Atlanta, New York and Boston all seem to be having positive effects on the local economy.

The U.S. Virgin Islands combines an important history, a booming sustainable tourism industry and the allure of duty-free shopping, all in a picturesque natural setting that makes the territory very attractive to potential tourists. The ease of travel for Americans, who don’t have to deal with a language barrier, passports or currency exchange, helps make the territory especially attractive to citizens from throughout the U.S. and its territories.

Although it’s well known that Christopher Columbus first landed in the Caribbean in 1492, fewer people are aware that he reached St. Croix just a year later. Additionally, the Jamestown settlers stopped off in St. Thomas in 1607 en route to Virginia. Remnants of this history and more can be part of the USVI tourism experience.

Preserving the character of the islands so they can be experienced, at least visually, in much the same way explorers did years ago is a true priority. To this end, there has been an increasing focus on ecotourism and sustainable tourism, which allow visitors to experience as much of the natural beauty of the USVI as possible.

Meanwhile, for those who want to shop, there are no customs duties or sales tax on tourism-related purchases, and U.S. citizens benefit from a $1,600 duty-free shopping quota. This allows travelers to enjoy many of the territory’s great shopping bargains, from cameras and leather goods to fine china and jewelry.

With all of the growth occurring in the U.S. Virgin Islands, it has become an attractive moment for businesses looking to open in the Territory, as well as for groups connected with the tourism industry. Entrepreneurs considering a move to the USVI are encouraged to speak with an experienced local business law attorney to ensure a successful relocation.

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

2014_digitalAs more aspects of people’s lives move online, managing numerous digital accounts becomes a complex process, and one that presents numerous challenges. These issues are not limited to just the account holders themselves. In fact, the real test may come after people pass away and their families are left to make sense of their digital assets.

What constitutes “digital assets” may vary from case to case, but in a broad sense the term can be applied to a variety of online content and accounts, as well as devices themselves. In other words, your computers, tablets, cell phones and Internet-equipped devices may all qualify. So does your email, social media content, accounts with online businesses and digital content, such as movies or photos you’ve posted or stored online.

One of the major challenges involved in protecting your digital assets after your death is all of those user agreements you’ve most likely clicked through and signed or accepted, often without reading. They actually place certain restrictions on your online content and records, including on how they may be used or accessed, and by whom. When these user agreements turn out to contradict federal or territorial laws, the process of dealing with your digital assets can quickly become quite complicated.

To help make the process of handling your digital assets substantially easier for your friends and family members, it’s helpful to include them as part of your estate planning process. As a way of getting started, you can make a list of all of your online accounts — basically anything that requires a user ID, password or other login information, including secret questions and answers — and put all of that information in a password-protected document or spreadsheet. Be sure to update the document any time you are required or otherwise compelled to change any of the information, or when you create a new account.

Once you’ve created this comprehensive list, you will want to document its existence, providing information on where to find it and how to access it. Work with an attorney to make sure you cover everything you need and that you remain in compliance with territorial and federal laws. You may wish to store this information at your attorney’s office or in a safety deposit box. Finally, in your will or in a statement drafted by your lawyer, you should authorize the disclosure of your account records to the executor of your estate.

In any matters related to estate planning, it’s best to consult with an experienced legal professional to ensure you’re covering all your bases, while also making the process of settling your estate substantially easier for your loved ones.

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

2014_heaven_gratisographyLike the old saying goes, there are only two certainties in life—death and taxes. Through effective estate planning, you can prepare for the future and address these two very important issues, as difficult as they may be and as little as you’d like to think about them on a daily basis.

A comprehensive estate plan allows you to avoid most of the common challenges family and friends of the deceased face immediately after someone passes away. These issues are most often associated with the following:

Estate taxes

Especially for wealthy individuals, it’s important to engage in this planning process to avoid unnecessary and costly estate taxes upon your death. If not addressed ahead of time, the federal government may take a significant portion of your estate away from your loved ones and beneficiaries.

To help reduce these taxes, you may choose to gift certain assets directly to your heirs, charitable organizations or a trust, which will disperse the assets to your chosen beneficiaries at a time you see fit—such as after you pass away. You may also wish to gift some or all of the interests in a closely held business, such as a limited liability company (LLC) or a corporation. By doing so, you essentially decrease the value of your estate because you no longer own the assets in question, reducing estate tax liabilities in the process.

Asset protection

For business owners and wealthy individuals, the threat of a potential lawsuit or divorce can be significant. Advanced estate planning strategies, including spousal lifetime access trusts and other mechanisms, protect assets and property from any threats that could arise in the future. There are also some offshore trusts and asset protection trusts that are formed specifically to keep assets out of the hands of divorced spouses and creditors. You may also gift assets through a family-owned LLC, which provides another level of protection for you and your loved ones.

Legacy creation

In addition to eliminating or reducing estate taxes and protecting assets, your estate plan can also help create an ongoing legacy that lasts for the generations that come after you. It’s possible to set up trusts that last for more than 100 years into the future, establishing dynasty trusts for future family members. Another common example is the establishment of a charitable trust or private foundation that will continue to receive endowments from your estate many years down the line.

There’s no doubt about it—estate planning is absolutely critical toward minimizing estate taxes, protecting your beneficiaries and ensuring your legacy lives on after you pass away. Work with a skilled estate planning attorney to learn more about your options and to set up a plan that meets your specific needs and circumstances.

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

2014_taxes_stockmonkeyscomAlthough you don’t need to officially file your taxes until April 15, 2015, there are numerous steps individuals and businesses should take before the end of the calendar year 2014 to help reduce the amount of taxes owed to the IRS next spring.

Unfortunately, gridlock in the U.S. Congress did not make it easy to predict which tax breaks would be extended as we reach tax season. Lawmakers only acted in the last month on deductions for college tuition and private mortgage insurance payments, among other deductions.

There are some things you should consider doing before the end of the year to better manage your tax bill. These include the following:

Income deferment: If you make more than $406,750 as a single person or $457,600 for a married couple filing jointly, you fall into the top federal tax rate category of 39.6 percent. As you look at the amount of income you’ll receive by the end of the year, you should think about whether it will put you over the edge of this top tax bracket. If so, consider asking your employer to delay your bonus until January or contributing more money to a tax-deferred retirement plan. If you own a business, you might consider holding on additional invoices until 2015 begins.

401(k) contributions: Regardless of your tax circumstances, it’s always a good idea to contribute as much as possible to your 401(k) or other retirement savings plan. Most of these contributions occur pre-tax, and thus you’ll be able to report a lower amount of income to the IRS. You will also see greater tax-deferred earnings the earlier you contribute to the account.

IRA contributions: Like a 401(k), contributing to an individual retirement account allows you to deduct some or all of the amount on your taxes. Even if you are not able to claim any tax credits this year, you are still taking the steps necessary to protect yourself and your loved ones in the years to come.

Capital losses: If your portfolio includes assets that have decreased in value, you may be able to offset the tax impact of capital gains you have experienced over the past year. In years in which your losses total more than your gains, you may reduce your regular income amount by up to $3,000. It’s also possible to carry more than this amount into future tax years.

Mortgage payments: If you own a home, consider making your January mortgage payment and property tax payment before the end of 2014. This will allow you to deduct the interest on the mortgage and your property tax amount on your upcoming return.

Charitable donations: One of the best ways to reduce your tax liability is to make a donation to a charitable organization, which may come in the form of a monetary contribution, furniture, household goods, clothing, motor vehicles and a wide range of other items. You may even choose to donate stocks that you’ve held for at least 12 months.

Although tax season hasn’t quite begun, keep these concepts in mind as you round out 2014, and work with an experienced tax planning attorney if you have any questions or wish to receive sound legal guidance.

BoltNagi is a well-established and widely respected and well-established estate and tax planning law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

2014_marijuana_flickr_wackystuffOn November 4, voters in the U.S. Virgin Islands approved the use of medical marijuana in the Territory, paving the way for legalization of producing, processing, manufacturing and distributing hemp for medicinal purposes in “America’s Paradise”. The measure received widespread support, passing by a margin of 56 to 43 percent.

The referendum was nonbinding, which means that it essentially served as an opinion poll of the public. It is up to the 31st Legislature of the Virgin Islands to actually legalize medical marijuana, the 31st Legislature taking office in January will potentially draft legislation and deliberate the topic over the next year.

Medical marijuana legalization is not a simple matter to address, as there are numerous regulations that would need to be implemented as part of the process. The U.S. Legislature would need to address how officials would regulate dispensaries and distribution facilities, as well as the amount of the drug individuals would be able to possess with a prescription.

What is clear is that legalizing medical marijuana has the potential to help people suffering from a variety of health conditions, including glaucoma, cerebral palsy, multiple sclerosis and many others. Earlier this year, when the Legislature approved the referendum, several Virgin Islands Senators went on record speaking to the fact that they had friends or family members who would directly benefit from legalization.

In addition, some advocates point out that medical marijuana—and eventually its legalization for recreational uses—could draw more tourists to the U.S. Virgin Islands and the Caribbean as a whole. At September’s “State of the Industry” tourism conference in St. Thomas, Sen. Terrance Nelson, a supporter of legalization, argued publicly that the Caribbean Tourism Organization should leverage cannabis as a commodity, as many people who visit the region do so with the expectation that they’ll be able to secure marijuana. According to Nelson, this could represent another positive marketing tool for the tourism industry, the largest driver of the Territory’s economy.

On the other hand, medical professionals and public health officials continue to warn that the legislature should move cautiously when it comes to legalization and decriminalization efforts. Caribbean Public Healthy Agency Executive Director Dr. C. James Hospedales issued a message to officials at the State of the Industry event, noting that studies have indicated that smoking marijuana regularly causes clear mental and physical health problems for individuals.

The public’s approval of the referendum comes two months after a 30th Legislature of the Virgin Islands committee approved a bill that would decriminalize the possession of small amounts of marijuana—a measure that passed 5-0. Governor de Jongh vetoed this proposed law but it was overturned by the 30th Legislature on December 19 by a unanimous vote of present Senators.

Regardless of where you stand on this issue, it’s clear that the marijuana policy in the U.S. Virgin Islands is changing, and will likely continue to do so in the next several years. It will be interesting to see how the 31st Legislature moves ahead with the results of the November referendum vote.

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

gratisography_wrestleWhen starting a new business or restructuring an existing one, you may choose to set up a corporation. The two most common options are the Subchapter S corporation and the C corporation.

These two varieties of corporations are actually quite similar in many ways — they are structured similarly, they both offer limited liability protection to their shareholders and they both require the filing of documentation and the following of standard formal obligations regarding bylaws, holding regular meetings, issuing stock and filing annual reports regarding finances and other matters. But Subchapter S and C corporations also differ in several key ways. The following are the major differences between the two:

Whether to form a Subchapter S or a C corporation may depend on the size of your business. A Subchapter S corporation is typically an ideal structure for smaller businesses with shareholders that are U.S. citizens and fewer than 100 in number. A C corporation, on the other hand, is often a larger business with more than 100 shareholders. These shareholders may include institutions that have invested in the business.

Taxation is a key difference between S and C corporations. Subchapter S corporations don’t pay corporate income tax. Rather, any profits or losses pass through the business and are accounted for on the personal tax returns of the owners. C corporations, on the other hand, file corporate tax returns and run the risk of being taxed two times over if dividends are paid to their owners, as the owners must also pay personal taxes on dividends. Both types of corporation require the payment of personal income tax on employees’ salaries and any dividends the corporation receives.

S and C corporations have different ownership restrictions. The restrictions on C corps are simple: there are none. This makes them very flexible from an ownership standpoint. Meanwhile, Subchapter S corporations are bound to a maximum of 100 shareholders — limiting opportunities for growth without having to restructure — and cannot be owned by anyone other than the shareholders themselves. This means that another Subchapter S corporation, a C corporation, an LLC or a partnership cannot own a Subchapter S corp. There are also stock restrictions on Subchapter S corporations, whereas C corporations are allowed to have multiple classes of stock.

For business owners and executives looking to start a new corporation or make changes to the structure of an existing business, understanding the differences between S and C corporations will be critical in how they move forward. The best approach to incorporating your business involves discussing the different options with an experienced business law attorney.

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

flickr_Frits_Ahlefeldt_LaurvigOne of the most important relationships business owners and executives have is in working with their business attorney. An experienced, highly qualified legal professional can be an invaluable team member and source of knowledge, advice and wisdom. Cultivating this relationship can reap rewards many times over.

A key aspect of this relationship involves open communication and trust, as it’s only through honest conversations that a truly productive partnership can be built. One of the most important means of communicating with your business attorney is through asking questions and better understanding the way legal issues relate to your business. With this in mind, the following are five of the most critical questions you should be asking your business lawyer:

What do you need to know about my company to best help me?

For attorneys to effectively work with you and your company, it’s crucial that they understand the key aspects of your business. These include the products and services you provide, the company culture and the people behind your organization. Communicate everything important about your business from the start.

How should I be approaching employee benefits, policies and other programs?

Because your employees form the backbone of your company, you want to ensure you’re treating them as the critical assets they are. Discussing your company’s benefits packages, employee policies and any other programs you might offer with your labor and employment attorney can help you make certain you’re in compliance with federal and territorial law and are treating your workers in a positive manner.

How am I protecting my company’s intellectual property?

Handling intellectual property in a way that protects your business can be complicated, as copyrights, trademarks and patents are the subject of much legal discussion and debate. An attorney well versed in intellectual property law can help you ensure that these valuable assets — some of which your business may rely on heavily — are appropriately protected.

Am I up to speed on regulatory and legal changes that affect my business?

Regular communication with your government relations attorney is important for staying up to date on any major legal changes that might impact your business, ranging from taxation and financial developments to laws that impact your workforce. Being aware of and understanding these changes can save you money and unneeded hassles in the long term.

How much do you need to know about my future business plans?

If you are planning major changes to your business, including large purchases, a relocation or the launch of a new product or service, a skilled attorney can help ensure you’re doing so in a legally and financially sound manner.

Securing quality legal counsel is a wise investment for your business, as a full service business law firm you trust will guide you through difficult and challenging times for your company, as well as prepare you for the future. Consider these questions as you begin this very important relationship.

BoltNagi is a well-established and widely respected full service business law firm with attorneys who practices are concentrated in business law, real estate, finance, labor and employment, taxation, civil litigation and government relations.

It was a busy election cycle in the U.S. Virgin Islands, with the passage of a referendum on medical marijuana and the defeat of the proposed increase of senatorial terms by a wide margin. The Territory also has a new Governor-Elect in former Lt. Gov. Kenneth Mapp.

Mapp won a November 18 runoff against Donna Christian-Christensen after the two received the most votes in the November 4 general election. With nearly 64 percent of the vote, it was a decisive victory for Mapp, who has a long history of serving in the Government of the Virgin Islands. He replaces outgoing Gov. John deJongh, who was term-limited and unable to run again.

So what can we expect from the newly elected Governor? For the most part, Governor-Elect Mapp made jobs and economic growth the cornerstone of his campaign, which resonated with voters. He made a campaign promise of creating 1,000 government jobs after his election, along with strategies to reduce energy costs and the revitalization of the towns of Christiansted and Frederiksted.

To achieve his jobs promise, Mapp has proposed recruiting 250 new law enforcement officers, more than 500 teachers and school staff, 75 correctional officers and 125 nurses, revenue agents, emergency medical technicians and other classified government workers. He has argued that excessive overtime in government positions has caused budgetary challenges, and by reducing overtime and filling vacant roles, his job goals will be attainable. In particular, Mapp says, the hiring of revenue agents will help ensure the government collects more of the taxes and fees owed the Government of the Virgin Islands.

When it comes to tourism, Mapp supports the construction of at least one hotel on St. Thomas and has plans for completing the Main Street Enhancement Project to revitalize downtown Charlotte Amalie. He also approves of the construction of a new branded hotel on St. Croix.

Looking at the Executive Budget of the Government of the Virgin Islands, Mapp wants to closely analyze any areas of waste and possible consolidation to achieve greater efficiencies, and to balance the budget by leveraging federal funds in a timelier manner.

Mapp has served in various roles in government, including the Director of Finance and Administration for the Public Finance Authority, Director of the Consumer Services Administration and Assistant Director of the Industrial Development Commission. He also served in the 15th and 18th USVI legislatures and was Lieutenant Governor from 1995 to 1999.

Like many candidates for public office, Governor-Elect Mapp outlined an ambitious agenda on the campaign trail. Although it’s difficult to determine how successful he will be with these initiatives, we do know some of the new Governor’s top areas of focus as he takes office on January 5.

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

During a divorce, considering the needs of the children is of paramount importance. Making sure kids’ financial, medical, educational and developmental needs are well cared for can be a complex process, and because it’s such an important one, the court will take a variety of factors into consideration in determining an appropriate and achievable child support plan.

The primary factor influencing child support in the U.S. Virgin Islands is always going to be the children’s needs and best interests. As different children require various forms of care and attention, it’s crucial that all of those needs are factored into a child support arrangement. Many things must be taken into account when determining child support, including the children’s ages, any medical or developmental conditions, educational needs and other factors and situations that may result in significant expenses. With this in mind, parents must be able to project likely ongoing and potential future expenses so as to establish a realistic and accurate goal for child support payments.

A second key factor the court will consider is the situation of each of the parents. The custodial parent’s income will often need to be supplemented by the noncustodial parent to ensure that the custodial parent’s needs are met, insofar as they affect the kids. The noncustodial parent’s income is also a major factor driving child support, as the amount this individual able to pay each month is dependent upon how much income he or she makes.

A final major consideration is the family’s standard of living prior to the divorce. When at all possible, courts will try to maintain that standard of living, to the best of their ability, through child support. Because divorce results in a significant change in the children’s life situation, the goal is to keep the standard of living as consistent as possible to maintain some semblance of stability. This can be difficult, as a divorce effectively requires two households to be supported on the income that once supported just one. Thus, maintaining the children’s former standard of living is truly a goal rather than a strict requirement.

The calculation and establishment of child support is a difficult and important aspect of any divorce involving kids. However, just because an initial agreement is reached doesn’t mean that all the work is done. The terms of the agreement and the amount of child support may need to be adjusted over time as the parents’ abilities and the children’s needs change. If this is the case, you or your former spouse may opt to seek a modification to the original agreement.

To make sure you protect your rights and best interests — and those of your children — in a divorce, be sure to work with an experienced family law attorney.

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