by Lisa Paine | Dec 30, 2024 | Business/Corporate
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.” –FinCEN
The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction. Texas Top Cop Shop is only one of several cases that have challenged the Corporate Transparency Act (CTA) pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal.
On December 23, 2024, a panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction entered in the case of Texas Top Cop Shop, Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. FinCEN immediately issued an alert notifying the public of this ruling, and recognizing that reporting companies may have needed additional time to comply with beneficial ownership reporting requirements, FinCEN extended reporting deadlines. On December 26, 2024, however, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | Dec 30, 2024 | Business/Corporate
The Fifth Circuit has removed the nationwide injunction concerning Corporate Transparency Act reporting. The Fifth Circuit’s decision overrides the earlier nationwide relief granted by the district court.
Litigation will continue in this matter, but, as of now, the CTA/BOI reporting requirements are active and enforceable. However, FinCEN has granted certain extensions to the reporting deadlines. See the Alert on the FinCEN website for full details.
Action Items:
- Ensure compliance by filing BOIRs for all entities formed prior to January 1, 2024, by the January 13, 2025 extended deadline (the deadline was previously January 1, 2025).
- Address any BOIR reports that were due while the injunction was in place. Entities formed in 2024 were to file within 90 days of formation. However, FinCEN has granted some extensions for entities formed between September 4, 2024 – December 23, 2024.
- Continue to monitor the FinCEN website for any updates or relief that may apply.
We understand the timing of this news, especially during the holiday season, is far from ideal. Nonetheless, we encourage you to focus on completing these reporting requirements to avoid any non-compliance issues.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | Dec 13, 2024 | Business/Corporate
The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction that: (1) enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically, (2) stays all deadlines to comply with the CTA’s reporting requirements. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024. “On December 23, 2024, the Fifth Circuit Court of Appeals stayed the district court’s injunction against the CTA reporting requirement, reinstating the January 1, 2025 deadline for reporting compliance for companies in existence before 2024.”
Texas Top Cop Shop is only one of several cases in which plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional.
While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | Dec 12, 2024 | Estate Planning, Trusts
Many people create a revocable living trust to avoid probate, maintain privacy, and ensure smooth estate distribution. However, these benefits only apply if you properly “fund” your trust, meaning you must transfer assets into it. Establishing a trust without funding the trust is like installing a safe but never placing your valuables inside.
What Is Funding a Trust?
Funding involves changing ownership or beneficiary designations of your assets—such as real estate, bank accounts, or investments—so that the trust, rather than you personally, owns them. You can also name the trust as beneficiary on life insurance policies and retirement accounts; however, you must consult with your attorney prior to naming a trust as a beneficiary to a retirement account to discuss potential tax implications.
Why Funding Matters
- Avoiding Probate: Assets inside the trust avoid probate, saving time, costs, and hassles. Unfunded assets still face probate, undermining your plan.
- Privacy: Unlike probate, trust assets remain private, shielding your family’s financial affairs from public view.
- Control Over Distributions: Trusts let you dictate how and when beneficiaries receive their inheritance. Without funding, state laws and probate courts decide.
- Incapacity Protection: If you’re unable to manage your affairs, a successor trustee can step in to handle trust-owned assets without court intervention.
Common Mistakes
Many forget to transfer all their assets to their trust. Neglected real estate, bank or brokerage accounts, and outdated beneficiary designations can bring the estate back into probate or undermine your estate planning intentions.
How to Fund Your Trust
You should consult with your attorney regarding your individual estate plan and circumstances prior to funding your trust.
- Real Estate: Execute and record a new deed transferring title to the trust.
- Bank & Investment Accounts: Contact financial institutions to retitle accounts.
- Personal Property & Business Interests: Follow proper legal steps to transfer ownership.
- Retirement Accounts & Life Insurance: Consider naming the trust as a beneficiary (often as a secondary beneficiary) to optimize tax and distribution rules. However, you must consult with your attorney prior to naming your trust as the beneficiary of a retirement account.
Ongoing Maintenance
Each time you acquire new assets, remember to update titles or beneficiary designations. Review your trust regularly with an estate planning attorney to ensure it stays fully funded.
Bottom Line
Funding is crucial to a trust’s effectiveness. An experienced Arizona estate planning attorney can guide you through the process, ensuring your trust works as intended, from avoiding probate to protecting loved ones and preserving your legacy.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | Jun 21, 2021 | Estate Planning, Trusts, Wills
Many people think that estate planning is just about what happens when someone dies. However, an equally-important part of estate planning is ensuring that you are cared for while you are still alive. If you become incapacitated, even for a short period of time, who will pay your bills or decide where you should live? Who will determine what doctors will care for you, or what treatments and medicines you will receive?
A comprehensive estate plan will include powers of attorney for both your finances and health care to ensure that the persons making decisions on your behalf are the ones that you want. You can select different people – and backups – for your financial and health care powers of attorney. Without these powers of attorney, if you become incapacitated, your family may have to go through the court process of having a guardian and conservator appointed for you and that can be expensive and onerous.
Besides the routine responsibilities that your agent under a financial or health care power of attorney may have, you can also give specify directions regarding different situations. For example, if you are incapacitated, do you want to continue making charitable donations or paying for a grandchild’s piano lessons? Can your health care agent make mental health care decisions on your behalf?
The clearer you are with your wishes, the better your loved ones will be able to care for you during any periods of incapacity. So, when you are thinking about your estate planning, be sure to consider how you will be cared for during your lifetime as well.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
