What Is the Beneficial Owner Information Reporting Requirement?
The Beneficial Ownership Information (BOI) Reporting requirement is part of the Corporate Transparency Act (CTA), which aims to curb illegal activities such as money laundering, tax evasion, and financing of terrorism. The CTA requires businesses to report information about the individuals who ultimately own or control them—their "beneficial owners"—to the Financial Crimes Enforcement Network (FinCEN).
Beneficial owners are individuals who:
Own 25% or more of a company's equity, or
Exercise substantial control over the company.
When does the BOI report need to be filed?
The deadline for filing a Beneficial Ownership Information (BOI) report depends on when the company was created or registered:
Before January 1, 2024: The deadline is January 1, 2025
January 1, 2024 or later: The deadline is 90 days after the company receives notice of its creation or registration
January 1, 2025 or later: The deadline is 30 days after the company receives notice of its creation or registration
Does the BOI Reporting Requirement Apply to Estates?
Yes, it does. If an estate holds an ownership interest in a business, the business is required to comply with BOI reporting. While the deceased individual was likely the beneficial owner during their lifetime, the responsibility for reporting shifts once they pass away.
As an executor, administrator, or trustee managing the estate, you will need to ensure that the necessary reporting continues if:
The estate retains a controlling interest in the business.
Ownership transfers to a trust or individual with significant control over the business.
In this situation, the estate or its representative must disclose who the new beneficial owner is, whether that’s a beneficiary, trust, or another individual who takes control.
Key Reporting Obligations for Estates
Determine Beneficial Ownership: The first step is to determine who the new beneficial owners are after the original owner has passed. This could be the executor, a beneficiary, or even a trustee.
Submit Required Information to FinCEN: The business will need to report the new beneficial owner information to FinCEN. This includes:
Full legal name,
Date of birth,
Residential address, and
A government-issued ID number (such as a passport or driver’s license).
Keep Information Updated: Any changes in ownership or control must be promptly reported to FinCEN.
Comply with Deadlines: The deadlines for reporting beneficial ownership changes depend on the nature of the change and the entity. Typically, businesses must report changes within 30 days of the event.
Common Scenarios Involving Estates and BOI Reporting
Business Interest Transfers to a Beneficiary: If a business interest held by the estate transfers to a beneficiary, that individual likely becomes the new beneficial owner. The business will need to report this change.
Executor Controls the Business Temporarily: In some cases, the executor may temporarily hold control of the business during the probate process. The executor’s information may need to be reported if they exercise control over the business.
Business Interest Transferred to a Trust: If the estate transfers the business interest to a trust, the trustee may need to be reported as the beneficial owner. If the trust distributes the business to multiple beneficiaries, further reporting may be necessary.
Consequences of Non-Compliance
Failure to comply with the Beneficial Ownership Information Reporting requirements can result in penalties. Businesses may face civil penalties, fines, or even criminal charges for willful violations. As a fiduciary managing an estate, it’s crucial to ensure that the estate complies with these regulations to avoid exposing the estate or the beneficiaries to unnecessary legal risks.
For More Information
The FinCEN website has comprehensive information about the BOI requirement as well as a link to the reporting page. While you are not required to have an attorney prepare and file the report for you, please contact us if you would like assistance.