Is Your Small Business Ready for FinCEN?
UPDATE: Reporting time is almost here. See this information to determine your business\’s responsibilities. On September 30, 2022, the U.S.’s Financial Crimes Enforcement Network (FinCEN) issued its final rule on Beneficial Ownership Information Reporting Requirements, mandated by the Corporate Transparency Act (CTA). The rule aims to combat money laundering and terrorism by collecting and maintaining Beneficial Ownership Information (BOI) for U.S. businesses. It addresses the use of corporate structures, such as Limited Liability Companies (LLCs) by illicit actors and aligns with international efforts to combat unlawful activities. The rule outlines reporting requirements, including who must report and the violation consequences that are costly (like $500/day!). The current U.S. framework for combating money laundering and terrorism has shortcomings, making it attractive for illicit actors to create hidden shell companies. The final rule requires new covered businesses to submit timely BOI reports to FinCEN within 90 days of establishment. Existing businesses have until January 1, 2025, to submit their initial reports. Accuracy and updated information are emphasized. Reporting companies must include specific information in their initial reports, such as legal name, trade name, address, jurisdiction of formation, and EIN or TIN. They must also provide details of each beneficial owner and company applicant, including full names, dates of birth, addresses, unique identifying numbers, and images of identification documents. Corrected and updated information must be reported later. The final rule defines a \”beneficial owner\” as an individual who exercises substantial control over the reporting company or who owns at least 25% of the company (ownership interest). Exceptions to the definition include minor children, nominees, intermediaries, custodians, agents, employees, individuals with future inheritance interests, and creditors. If no exceptions apply, beneficial owners can be identified based on substantial control and ownership interests. The rule provides indicators of substantial control and clarifies the definition. Businesses must determine if they are considered reporting companies for purposes of the final FinCEN BOI rule. Domestic reporting companies include corporations, LLCs, or entities created by filing documents with a secretary of state or similar office. Foreign reporting companies are entities formed under foreign law and registered to do business in a state or tribal jurisdiction. The rule does not add exemptions beyond the 23 specified in the CTA. Companies must also determine the extent of their reporting obligations and maintain a record of changes in company applicant information. The definition of a company applicant is limited to one or two persons. Additionally, existing companies are exempt from providing applicant information, but new companies must comply. Complying with the final rule may be challenging, because it involves analyzing multiple individuals with ownership interests and substantial control. FinCEN has not imposed limits on the number of beneficial owners to be reported to create a comprehensive database. Small businesses may benefit from legal counsel to navigate and comply with these measures. Special thanks to our Attorney Ruth Stein, for culling the research.
DEI and Estate Planning: The Economic, Non-Business Case, Imperative
National Estate Planning Awareness Week has come and gone. But it was busy! I presented LGBTQ+ estate planning tips and a helpful loophole to members of the Dramatists Guild. Next, esteemed panelists and I shared thoughts about diversity and inclusion and the wealth gap in the context of the estate planning profession. Then, there was the usual stuff, non-stop. Estate planning loophole, you ask? Yes, there is for unmarried couples of certain ages with retirement assets. Contact us to learn more. Diversity & Inclusion and the wealth gap in estate planning, you ask? Yes, for me and our firm, diversity’s moral imperative is a given. Yet, there’s an economic imperative beyond the business case: To be successful in the U.S., one must be financially successful, which means be gainfully employed so that you can enjoy a comfortable living. Appropriate DEI initiatives in the estate planning profession, a profession traditionally dominated by old, white guys, address not just the mythical pipeline issue but compensation and retention issues, which ultimately address the wealth gap. Thus, it’s an economic imperative for estate planning firms to be authentically diverse and equitable and inclusive. (Read: Diversity is not just on our website or in support but front and center in our firm\’s planning professionals and we\’ve been this way since day one.) Mythical pipeline issue, you ask? Yes, but we’ll save that discussion for another day.
What Do We Do Now?
As I consider the emergence from the pandemic taking place in fortunate countries across the world, I am reminded of little hatchlings breaking through their shells, coming out gooey then fluffy, wide-eyed, and excited. However, unlike baby chicks, we’re not new to what it feels like to hug family, share spoonfuls of delectable dishes while dining in restaurants with friends, and lifting our faces to the sun unmasked. Still, we’re all wobbling about trying to understand the protocols – even me. Recently, at a small event honoring the late Honorable Ruth Bader Ginsburg where all attendees were required to show proof of vaccination, I was asked to join a table where everyone was unmasked. A judge I know but hadn’t seen in 2 years was also sitting there. We smiled and shared how glad we were to see each other again and I thoughtlessly reached out and took their hand. So happy (and eager) I was to touch someone other than family! Fortunately, they didn’t seem to mind. Then, another person introduced themselves to me and I immediately held out my hand and shook theirs and apologized after the fact. They responded, “No worries! We’re all trying to get our footing.” Yes we are. Hence, I was reminded that we all must be mindful of the reasonable fear that dwells within most of us from more than 18 months of being cut off from the most human of actions – touching another human being. And to that end, our office has finally decided on how we will handle meetings going forward: Signing conferences for an individual client, if they are amenable, will be held in-person, with everyone masked unless everyone avers that they are vaccinated. (Our entire staff is fully vaccinated.) Signing conferences with couples or individuals who don’t want to come in-person, will be held via Zoom, with the option of a mobile or in-person notary who will visit their home, fully masked if required. Client meetings are in-person or via Zoom, whatever is most convenient for the time scheduled. We continue to wash our hands and cover our faces when coughing or sneezing; these are just good habits. And we continue to strive to serve those we can; it’s just what we do. Be well…please.
Our Annual Highlights & Horizons Is Out!
2019-20 Highlights & Horizons – The Law Offices of Max Elliott on Biteable.
The New Illinois Trust Code as of 1/1/20
On July 12, 2019, Illinois Governor Pritzker signed into law the Illinois Trust Code. On January 1, 2020, the current Illinois Trust and Trustees act was completely repealed and replaced with this new law that brings significant changes to the current Illinois trust law regime. So estate planning attorneys will likely need to review and revise current estate planning instruments to ensure clients\’ estate plans comply with the new law. We\’re definitely doing that and if you would like your estate plan reviewed, contact us. In the interim, we\’ll be sharing insights about the effects of the new law on the Revocable Living Trust.
SECURE Act Upends Trust and Retirement Planning
On December 20, 2019, the current U.S. administration passed the SECURE (Setting Every Community Up for Retirement Enhancement) Act, effective January 1, 2020. The law provides needed breathing space for those nearing retirement age who\’ve yet to fill their retirement kitties. It does this by removing age restrictions on contributions to IRAs and other retirement interests and extending the required minimum distribution age from 70 1/2 to 72. ***DISCLAIMER: We\’re not financial advisors so do not act on the above information before contacting an advisor.*** However, the issue that estate planning lawyers must contend with is the removal of the \”stretch\” IRA, so trusts that used this feature to create legacies for younger beneficiaries must be amended.
School\’s Back In Session
Summer has ended for most families with children and we thought about this and other family dynamics in our most recent newsletter. However, the summer didn\’t stop Illinois Governor Pritzker from approving several laws that will affect families and businesses in the coming months. Here\’s a few that you may find interesting: The Illinois Trust Code, effective January 1, 2020, aligns Illinois with states that have adopted or established their own version of the Uniform Trust Code. Meaning for you: As you and your family move among the states, your estate plan may not need much revision. Assault or battery of an elderly person results in a loss of inheritance, effective January 1, 2020. Meaning for you: Nothing, we hope. Recreational cannabis will be legal, effective January 1, 2020. Meaning for you: If you will partake, don\’t do it near a federal agent; it is still against the law, federally, Uniform Partition of Heirs Property Act, effective January 1, 2020. Meaning for you: If you inherit property with someone else as a co-tenant and y\’all can\’t get along, the property can be sold without mutual agreement. Department of Public Health Powers and Duties Law amended to allow a feasibility study for a state repository for Healthcare Powers of Attorney and other medical Advanced Directives. Meaning for you: Unclear; these are your taxpayer dollars going to a study to determine if your medical information should be held by the State. Those are the headliners that we found relevant to our clients and associates. We\’ll be providing deeper analyses of these issues and others as the laws become effective and part of our society\’s fabric.
Celebrating PRIDE
Though small efforts may pick at the corners of diversity, our firm continues to stand proud and strong with our LGBTQ community members and are pleased that the jurisdictions we serve are like-minded. The overall legal system is also standing with us as we explained in our most recent blog post: \”On Valentine’s Day of this year, 2019, the American Bar Association’s (ABA) Standing Committee on Ethics and Professional Responsibility published Formal Opinion 485 establishing guidance for judges who may not want to perform same-sex marriages. Specifically, the Formal Opinion addresses the issue of “whether a judge subject to the Model Code of Judicial Conduct may perform marriages of opposite-sex couples but refuse to perform marriages for same-sex couples.” Read more…
National Small Business Week: Smallbiz by the Numbers
Join us in celebrating National Small Business week! Most of U.S. businesses – 99%! – are classified as small, which means you know a smallbiz owner if you’re not one yourself. And, more importantly, this means that smallbiz is critical to our economy. The Small Business Administration has numerous factors categorized per industry that determine whether a business is small. And though it may not seem like a small amount to sum, the maximum amount of annual revenues for small businesses generally start at $7.5 million. Knowing where your business stands is important because the government provides a number of resources to keep this particular economic engine going. In addition to important resources for start-ups, through Small Business Investment Companies (SBICs), the SBA helps eligible smallbiz owners obtain loans from $250,000 to $10 million and has programs directly tailored for women-owned small businesses. As a woman-owned small business, The Law Offices of Max Elliott has an empathetic perspective and is honored to serve clients in the manufacturing, luxury goods, herbal product, and non-profit sectors. Furthermore, recognizing the special constraints many entrepreneurs confront, we happily tailor our services with unique fee structures to help start-ups secure their dreams. So, if you or someone you know wants to start or already owns a smallbiz, stay tuned for useful information we’re sharing across our social medial channels – Facebook, Instagram, Twitter – this week about small business. Then, share!
in praise of service…
This year our firm was honored by being selected as the exclusive estate planning legal service provider for personnel of Chicago\’s Veterans Administration Hospital. It is our privilege to serve those who serve our veterans. FYI – To show our appreciation, we also provide discounted legal services to veterans and first responders on all matters, not just estate planning.