The Corporate Transparency Act: How This New Federal Reporting Mandate Impacts Estate Planning

You may have heard that, beginning in January 2024, the U.S. Federal Government Financial Crimes Enforcement Network (FinCEN) is requiring all businesses to report the personal information of anyone who is a beneficial owner of the business. You may not have realized the impact this new reporting could have on your estate planning.

What is The Corporate Transparency Act (CTA)?

As a basic summary, the Corporate Transparency Act requires the reporting of beneficial ownership information (BOI) for all incorporated businesses. This is an attempt to reduce financial crimes committed under the umbrella of a corporation.

If your corporation was created before January 1, 2024, you have until December 31, 2024 to report your information. If created in 2024, your reporting must be done within 90 days of the creation. If registered on or after January 1, 2025, you have only 30 days. If there are any updates or corrections to the BOI previously filed with FinCEN, these updates, changes, or corrections must be submitted within 30 days.

To read FinCEN’s Official Beneficial Ownership Information Brochure, click here

What Happens If I Don’t File or Update Information with FinCen?

If you ask us, disregarding this new federal reporting mandate has some heavy civil and criminal penalties. Fines of $500 per day, and prison time are on the table. Although we cannot give legal advice on this blog, we can state the obvious: It would be ill advised to ignore these new regulations.

How Does This Affect My Estate Plan?

There are several ways that this new reporting law can affect your estate planning, whether already completed or still in the works. As estate planning attorneys, we frequently use the LLC as a vehicle for protecting our clients from personal liability. Because of the CTA, anyone using an LLC or other registered corporation for their estate planning would be required to gather private information from their beneficiaries and report that information to the federal government.

In addition, whenever someone passes away, this would trigger a change in the Beneficial Ownership Information, which would require reporting updates within 30 days of the change. In our experience, often the passing of a loved one makes it difficult for the grieving family members to keep track of all of the different tasks that must now be completed. These tasks will now include updating BOI info submitted to FinCen within 30 days.

Contact Your Estate Planning Attorney Today

These federal mandates are not something to be ignored. If you have any questions about your compliance with these requirements, contact your attorney and find out how your estate plan or other corporations will be affected.

Although the constitutionality of these mandates are currently being challenged in court, we expect that though they may be changed or updated as a result, they will not be going away. Quite possibly, an entire industry will grow from these new requirements. In the meantime, your estate planning lawyer or business attorney can help you navigate these changes to ensure that you are able to properly file your BOI information with FinCEN, and help you update information in a timely manner when things change.

To listen to our full podcast about the Corporate Transparency Act, click here.