Corporate Transparency Act – Trusts as Beneficial Owners of Reporting Companies
The Federal Government passed the Corporate Transparency Act with bipartisan support in 2021. The reporting requirements under the Corporate Transparency Act (the “Act”) went into effect on January 1, 2024. Reporting Companies, as defined by the Act, are corporations, limited liability companies, or other similar entities that are created by filing a document with the Secretary of State. A Reporting Company, that does not fall within one of the exceptions enumerated in the Act, must submit a filing with FinCen disclosing the Reporting Company’s Beneficial Owners. Beneficial Owners fall into two categories: (1) owns not less than 25% of the ownership interest of the Reporting Company or (2) exercises substantial control over the Reporting Company.
So, the short answer is that yes, individuals associated with a trust (trustee, settlor, and/or beneficiary) will need to be disclosed as Beneficial Owners of a Reporting Company.
Will the trust itself be considered a Reporting Company? If the trust was not created by filing a document with the Secretary of State, then the trust will not be considered to be a Reporting Company and, as such, the trust itself will not have any reporting obligations under the Act.
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