The Oklahoma Bar Journal February 2024

E state P lanning

Corporate Transparency Act: What It Is and How It Affects Estate Planning Attorneys By Chantelle Hickman A S ESTATE PLANNING ATTORNEYS, we are tasked with helping people consider what options they have for passing their legacy on to their loved ones. We all know that every client is different and has specific needs and goals. For example, some clients may come to you with interesting family dynamics, such as a child with special needs, a child with a drug addiction problem or a family that cannot get along. Maybe the client has a significant amount of money in an individual retirement account, and you must advise them on the income tax consequences their loved ones may face when they inherit that account.

The Corporate Transparency Act (CTA) was effective as law in January 2021. 1 However, the law did not become fully implemented until Jan. 1, 2024. 2 The overall pur pose of the law is to require busi nesses to report to the Financial Crimes Enforcement Network of the United States Department of the Treasury (FinCEN) about who has an ownership interest in a business. Many business owners are going to be required to file a report with FinCEN. This is of particular importance to estate planning attorneys who may be creating business entities for clients or assigning business interests to trusts they are creating because this will trigger a need to file a report with FinCEN.

One particular issue that we may face as estate planning attorneys is planning for clients who own a business. These clients may need assistance passing their business on to the next generation as they are ready to retire, or they may need assistance planning to help their family avoid pro bate and be able to continue to run or sell their business easily if they pass away. Furthermore, you may be creating different types of business entities, such as a limited liability company or family partnership, as a part of an estate planning strategy for a client. However, a new federal law, the Corporate Transparency Act, will affect the services we provide when dealing with these clients and their entities.

HISTORY

The CTA was included within the National Defense Authorization Act, so many of us may not have realized that this law was coming down the pipeline. 3 U.S. Representative Mike Rogers, the lead Republican of the House Armed Services Committee, stated the National Defense Authorization Act is a “bipartisan and bicameral agreement that makes the investments our military needs to maintain overmatch with China – from boosting deterrence to securing our supply chain this legislation demonstrates strength in the face of China’s threats.” 4 According to FinCEN’s fact sheet about the CTA:

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

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THE OKLAHOMA BAR JOURNAL