You may already know about the new rule that went into effect this year: the Corporate Transparency Act. Now, if you’re a “beneficial owner” of a particular type of entity (like a limited liability company or corporation), you have to file a particular form with the federal government. It’s called a Beneficial Ownership Information (BOI) report.

Do not stop reading. You need to file this one on time. The penalties for missing the deadlines are onerous: fines of hundreds of dollars per day and possible jail time.

IMPORTANT UPDATE: See our update on new developments regarding the Corporate Transparency Act as of December 3, 2024.

Below are frequently asked questions and answers about the Beneficial Ownership Information report. Looking for the short version? Skip to question 5 to see how this impacts your estate plan.

1. What is the Corporate Transparency Act?
The Corporate Transparency Act is designed to protect national security interests, combat money laundering, and protect interstate commerce. It does so by making sure that whoever owns an entity (see more details below) is identified (no more anonymity!) It’s the job of FinCEN, the Financial Crimes Enforcement Network, to collect and store that information. So, FinCEN now requires some entities to provide beneficial ownership information.

2. Who needs to file a report?
FinCEN requires most LLCs, corporations, and similar entities to file a BOI report. While there are some exceptions, if you use an LLC for your trust and there is a company involved, you (or your business attorney or CPA) may need to file a BOI report.

3. What information needs to be reported?
You’ll need to provide the following information:

• The official name of the LLC or entity
• Its address
• Where it was officially formed or created
• Its tax identification number
• Information about each beneficial owner: name, date of birth, address, and a form of identification (like a driver’s license or passport)

4. Wait, what is a beneficial owner?
A beneficial owner is a person who “exercises substantial control” over that entity, or owns at least 25%.

5. How does this affect my estate plan?
Often, a company owner or stakeholder will assign their interest in the company to a revocable living trust. If that gives the trust “substantial control” or at least 25% of the company, you’ll need to register the beneficial owners with FinCEN:

• The trustee
• A beneficiary who is the sole recipient of income or principal from the trust
• A beneficiary who has the right to demand a distribution or withdraw trust assets
• The grantor who has the right to revoke the trust or withdraw trust assets

More details are on the FinCEN website and you can file your BOI report there. Not sure what you need to do? Your CPA will be able to assist you. If you need a referral to a good CPA, we are happy to help. 

If you’re a JM LAW client, you qualify for membership in our CARES estate and legacy planning maintenance program. It’s designed to help you keep up with the changes that life—and the government—throw at you. Find out more about JM LAW CARES on our website or contact us to enroll.

This post was created by Michael Dietz, estate planning associate at JM LAW, PLLC.