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The Corporate Transparency Act (CTA) Could Impact Your Estate Plan

Starting on January 1, 2024, the Corporate Transparency Act (CTA) will require certain business entities to file a report detailing the ownership of their entity. Lawmakers designed this new law to combat money laundering, tax fraud, and other illegal acts. For this reason, if you have an entity as part of your existing estate plan, it’s crucial to comply.

The Corporate Transparency Act cta

What Is the Corporate Transparency Act?

Under the CTA, business entities must disclose specific company and owner details to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Such information includes:

● Company’s legal name 

● Address of business

● Jurisdiction in which the business was formed

● Tax identification number

Moreover, the reporting company must also provide details concerning its beneficial owners. These individuals hold substantial equity (at least 25 percent ownership interest) over the company. Additionally, companies formed on or after January 1, 2024, must similarly disclose information about their applicant who is the person who filed the document creating or registering a company. Such details include:

● Full legal name

● Date of birth

● Current address

● Unique identification number

Important Note: While a trust isn’t classified as a reporting company per the CTA, if your trust holds a stake in a reporting company (e.g., an LLC), specific details about your trust might need disclosure under the CTA as it could be regarded as a beneficial owner.

Does the CTA Impact You?

It’s essential to recognize that the CTA targets smaller companies. Unless your company falls under an exemption, which applies primarily to industries that are already heavily regulated, you will most likely be subject to this act. As part of our clients’ estate plans, we regularly establish entities that could meet the criteria for reporting companies—for example, LLCs and family limited partnerships.

What Do You Have to Do to Comply With the CTA?

To comply with the act, gather the required information for all reporting companies you own and all other beneficial owners. For entities created before January 1, 2024, submit the reports for each reporting company by January 1, 2025. Importantly, reporting companies created after January 1, 2024, must submit the initial report within 30 days of their creation. Please note that there’s a recent proposal for a new rule aiming to temporarily extend this deadline from 30 to 90 days for business entities formed during 2024.

Our Team of Expert Attorneys Can Help Ensure Your Estate Plan’s Compliance

Incorporating a business entity into your estate plan offers various advantages tailored to your needs. Undoubtedly, it can be a powerful tool for managing assets, facilitating smoother succession plans, providing tax benefits, and protecting personal assets. Additionally, it offers flexibility in structuring ownership, allowing you to customize solutions that align precisely with your goals. Our expert team specializes in navigating the complexities of the Corporate Transparency Act (CTA). We can guide you through the necessary steps to ensure full compliance with its requirements seamlessly. Contact us today to schedule your consultation.