Unfortunately, FinCEN is becoming even a bigger thorn in our side. You still have until the end of the year to register your entities with FinCEN that existed prior to 2024. New entities: you have 90 days from filing with the state to register. That’s not a suggestion ─ it is a commandment backed up with a $500/day, plus $10,000, plus two years in jail penalty for not complying. These guys are dead serious.
Any entity you register with the State has to be registered with FinCEN. We have already talked about all that.
The question I keep getting is about a trust that owns an LLC or corporation. You should have your living revocable trust own the stock in your little corporation or your membership interest in your little LLC. The only reason for doing that is so your family won’t have to probate the entity when you die.
Having a trust own a corporation or LLC doesn’t offer any more asset protection or anything like that. There really isn’t much anonymity gained by having your trust own your LLC, because your name has to “be on title” as the trustee. Remember, on any company ownership document (stock or membership certificate) the trust’s “name” has to have:
- Name of trust
- Date of trust
- Name of trustee
The registration requirement for FinCEN will require naming the trustees and the beneficiaries of the trust in most situations. In the standard living revocable trust, you are the grantor (guy who sets up the trust), trustee, and beneficiary. So, your information will be the same no matter what position you are reporting for. You are reporting your information, because the trust is the owner of your LLC or corporation.
Standard living revocable trusts don’t have to report unless they own a beneficial interest in a reporting company. They are not “reporting companies.” There are two types of reporting companies: Foreign companies, which you are probably not worried about, and then domestic companies, which are “corporations, limited liability companies, limited partnerships, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.” There isn’t any state filing with a trust.
However, if your living revocable trust owns an interest in a reporting company, the following individuals may hold ownership interests that will have to be reported:
- A trustee or other individual with the authority to dispose of trust assets
- A beneficiary who is the sole permissible recipient of trust income and principal or who has the right to demand a distribution of or withdraw substantially all the trust assets
- A grantor or settlor (the guy who sets up the trust) who has the right to revoke or otherwise withdraw trust assets
I am still going to say that your trust should own the interests you have in “companies.” It will avoid probate for your family. You have to report your trust information to FinCEN, but it is basically just your personal information. They have already got all your information, but you have to give it to them again in this context.
FinCEN is going to be holy hell in our lives. I would still wait to register until after the election. There is a small chance Trump will be elected and act immediately through executive order and clip FinCEN. But, if that doesn’t happen, we have to register all of our entities by the end of the year.
