Raleigh, Durham, Chapel Hill (NC) Law Firm: Business Law, Comemrcial Real Estate, Family Law & Immigration Attorneys
 
 

 

 
 
 
What's in a Domain Name? The Problem with Cyber-Squatters SEND TO A FRIEND
   PRINT THIS PAGE

When the North Carolina Limited Liability Act became effective on October 1, 1993, North Carolina joined many states in recognizing this relatively new entity.  Initially, limited liability companies (LLCs) enjoyed limited use due to uncertainties regarding how such an entity would be treated for federal income tax purposes.  The Internal Revenue Service (IRS) clarified its position on the treatment of the LLC and, as a result, limited liability companies have become increasingly popular as an alternative to incorporating the small business.

An LLC offers a wide variety of benefits and advantages.  A recent change is that an LLC, like a corporation, may now exist perpetually.   There is limited personal liability as a member of the entity, even if the member participates in the management of the business.  An LLC may have different classes of interests and offer greater flexibility in structuring the membership interests than an S corporation.  Notably, a corporation may be a member in an LLC, while a corporation may not be a shareholder in an S corporation.  In addition, the LLC can be classified as a partnership for income tax purposes, potentially eliminating the "double taxation" tied to a traditional C corporation.

There are two types of LLCs recognized in North Carolina: member-managed and manager-managed.  In a member-managed LLC, each member is also a manager of the LLC by virtue of being a member.  A member-managed LLC is analogous to a general partnership, as all members take a management role in the company.

In a managed LLC, there are in essence two tiers of membership.  Managers are designated to manage the day to day operations of the business and are not managers simply because they are members.  A manager-managed LLC is similar to a limited partnership, as a member can simply be an investor in the business without taking part in the management of the company.  A manager-managed LLC is useful because the individuals designated as managers do not have to be members or have any ownership interest in the company.  Again, keep in mind that corporations or other entities may be members or managers of an LLC. 

An LLC is created by filing Articles of Organization with the North Carolina Secretary of State.  An operating agreement executed at the organizational meeting governs the LLC, like the by-laws of a corporation.  The operating agreement outlines the responsibilities of the managers, members, the percentages of ownership and the percentages of profits and losses attributable to each member.  Changes in the ownership structure are easily documented by revising the operating agreement.

This article is a basic introduction to LLCs.  There are many factors beyond the scope of this article to consider when choosing a business entity.  You should consult your accountant to make sure that the LLC is the right entity for your business from a revenue/tax standpoint in addition to seeking legal advice.

If you have any questions regarding the information in this article, please call Tracy Debnam at (919) 250-2107, or by e-mail at ttdebnam@smithdebnamlaw.com.

Back to Index

Custody and Visitation -- Grandparents v. Parents  

Family law attorneys are seeing an increasing number of grandparents seeking visitation and custody with their grandchildren through the court system. Grandparents' concerns have been heightened by the U.S. Supreme Court decision in June that strengthened the rights of parents. In that case, a Washington state judge had awarded the parents of the deceased father regular weekend visits with their grandchildren. The Supreme Court overruled that decision and stated that under the Constitution, a state cannot be permitted to infringe on the fundamental rights of the parents to make child-rearing decisions. 

There is a strong presumption that a fit parent will act in the best interests of his or her child, and that includes making decisions about the degree of contact a child may have with anyone, including a grandparent. However, this presumption can be overcome in cases involving abuse, neglect, unfitness, or where a parent has acted inconsistently with his or her parental obligation.  A judge must respect the parents' fundamental right to make decisions concerning the care, custody and control over their children; at the same time, a judge's decision must reflect what is in the best interest of the child.  In North Carolina, there are four statutes that allow a grandparent to file an action for custody or visitation: 
     (1) N.C.Gen.Stat.§50-13.2(b1) permits a grandparent to intervene in an ongoing custody dispute and request visitation with a grandchild. 
     (2) N.C.Gen.Stat§50-13.5(j) allows a grandparent to petition for custody or visitation due to changed circumstances in those cases where custody has previously been terminated. In one case, grandparents were allowed to intervene when their visitation rights were arbitrarily terminated by the natural mother after the grandparents had established a continuing, substantial relationship with their grandchildren after an earlier custody order.
 
     (3) N.C.Gen.Stat.§50-13.2A permits a biological grandparent to file an action for visitation where the minor child has been adopted by a stepparent or relative of the child. To allow visitation where the minor child has been adopted by a stepparent or relative of the child. To allow visitation under this statute, the court must determine that a substantial relationship exists between the grandparent and the child, and that the visitation is in the best interest of the child. This statute is applicable only when the grandparents' biological child's rights have been terminated through a stepparent adoption, not if they were terminated in juvenile court or when the child is adopted by a non-family member. 
     (4) N.C.Gen.Stat.§50-13.1(a) permits any parent, relative or other person, agency, organization or institution claiming the right to custody of a minor child to institute an action for custody. Although broadly worded, this statute does not give grandparents the right to file an action for visitation if there is no ongoing custody dispute between the parents and where the grandchild is living in an intact family (which includes a single parent living with his or her child and a natural parent married to a stepparent living with the child). Again, judges must give weight to the presumption in favor of the parents, so a grandparent seeking visitation or custody under this statute must prove that the parent has abandoned the child, was abusing or neglecting the child, or that the parent was otherwise unfit and not acting in the best interest of the child. 

An important factor in either custody or visitation cases involving grandparents is the grandparents' level of involvement with their grandchildren, both before and after a divorce. Custody disputes can be traumatic for children who are put the in the middle of a chaotic battle between their parents. Often, grandparents provide the stable nurturing children need as they learn to adjust to their parents living in separate households. This is especially true when the grandparents have had an ongoing close relationship with their grandchildren. Under the law, however, the presumption in favor or parental rights is strong and the courts will interfere with that right only in limited circumstances. Grandparents who have strong relationships with their grandchildren and their grandchildren's parents are more likely to continue having access to their grandchildren and to be a continuing influence in their lives. 

If you have any questions about the information in this article, please call Cynthia McAllister at (919) 250-2168 or cmcalister@smithdebnamlaw.com, John Narron at (919) 250-2170 or jnarron@smithdebnamlaw.com, Rose Stout at (919) 250-2169 or rstout@smithdebnamlaw.com or Jeff Ellinger at (919) 250-2172 or jellinger@smithdebnamlaw.com.

Back to Index

 
© 2000 - 2008, Smith Debnam, L.L.P., Raleigh, North Carolina.  All rights reserved.
Web Site by Consultwebs.com, Raleigh, NC