---
url: 'https://www.fmjlaw.com/cabin-planning-and-the-corporate-transparency-act/'
title: Cabin Planning and the Corporate Transparency Act
author:
  name: Adam
  url: 'https://www.fmjlaw.com/author/adam-brownfmjlaw-com/'
date: '2024-05-30T22:02:54+00:00'
modified: '2024-05-30T22:02:54+00:00'
type: post
summary: 'Why you need to review your cabin plan now!'
categories:
  - Article
  - Thought Leadership
  - 'Trusts & Estates Blog'
tags:
  - cabin
  - Corporate Transparency Act
  - CTA
  - estates
  - trusts
published: true
---

# Cabin Planning and the Corporate Transparency Act

It’s cabin season! Memorial Day typically marks Minnesota’s unofficial start to summer, and many of our clients have already had a chance to open up their cabins and lake homes. However, cabins and extra properties can be a potential source of issues for families if they have not planned ahead for some of the pitfalls that are out there. 

There is no “one size fits all” planning option for the transfer and ongoing management of a cabin or similar property. With the federal government’s new Corporate Transparency Act now in effect, there are some additional considerations that go along with this planning – whether you are considering a new cabin plan or you already have one that is established. First, let’s examine options for property planning.

**Property Planning Options**

- **Direct Transfer of Ownership**. A direct transfer of ownership is made by conveying an interest in the property directly to the new owners. Some cabin owners simply want to pass the property to their children as equal owners and let them figure things out from there.

- **Cabin Trust**. A trust agreement is another form of ownership for a cabin property. A trust is an agreement where a grantor transfers property to a trustee to be held, administered, and distributed for the benefit of the trust beneficiaries. There are different types of trusts that can be utilized for a cabin succession plan. Trusts can be either revocable or irrevocable, and there are numerous important considerations that may dictate which form of trust is selected.

- **Business Entity**. The ownership of a cabin or lake home can also be transferred to a business entity, such as a partnership or limited liability company (LLC). The family then implements a partnership agreement, operating agreement, or other such agreement that outlines the control of the property, the succession of the entity interests, and other such important issues.

- **Hybrid Structure**. A structure of ownership that is becoming increasingly popular is the use of a trust and an LLC for the ownership of a family cabin or recreational property, especially where there is a desire to create a legacy property to be enjoyed by multiple generations of owners. The basic structure is that an LLC is formed to hold title to the property. A trust agreement is also implemented and the ownership interest in the LLC is owned by the trustee to be held, administered, and distributed for the benefit of the trust beneficiaries.

**Corporate Transparency Act Considerations**

The Corporate Transparency Act (CTA) is a new federal law that requires most business entities to file a report containing information about their company and their beneficial owners with the U.S. government, specifically with the U.S. Treasury Department’s Financial Crimes and Enforcement Network (FinCEN). The CTA was created for the purpose of detecting, preventing, and punishing terrorism, money laundering, and other misconduct carried out through business entities.  It is aimed at finding and preventing bad actors who would funnel money through cover businesses, assets, and properties. 

Under the CTA, any entity that fails to file a required report could be subject to civil and/or criminal penalties. So, everyone who owns property in an LLC or other business entity needs to determine whether they have to comply with the CTA’s reporting requirements.

**CTA Applicability**

Determining whether the CTA applies to an entity can be a complicated analysis. For example, there are 23 exemptions to the reporting requirements. However, unlike other federal regulations that generally exempt smaller entities (e.g., the FMLA), the CTA is aimed at collecting information about smaller companies and business entities. As such, the exemptions are geared toward larger entities and entities that are regulated in other ways, including banks, insurance companies, credit unions, and publicly traded entities.

Unless one of the exemptions applies, **the CTA requires reporting for any entity created by filing a document with the Secretary of State or a similar office**. This includes properties that have been set up as an LLC or other business entity, and it can include some trusts as well (NOTE: a Trust CAN be a beneficial interest holder of a business, which means the Trustor, Trustee, and/or beneficiary may need to be disclosed in a CTA filing). Ultimately, any entity that was created by filing a document with the Secretary of State would be required to submit a report under the CTA (a trust does not typically file documents with the Secretary of State as part of its creation). Entities that have filed with a court for purposes of jurisdiction or registered with a state for some other reason *but have not filed creation documents* *with the Secretary of State* would most likely not need to report.

**What Information Needs to be Reported to FinCEN?**

All non-exempt business entities, including LLCs, will be obligated to submit a Beneficial Ownership Information (BOI) Report to FinCEN.

The BOI Report includes:

- Information about the reporting company, including full legal name, any tradename or D/B/A, complete current address, the state, tribe, or foreign country of formation, and the taxpayer identification number.

- Information about every beneficial owner, including full legal name, date of birth, complete current residential address, a “unique identifying number” (likely a passport or driver’s license number), and a copy of the beneficial owner’s passport or driver’s license.

A “beneficial owner” is any individual or trust that directly or indirectly (1) exercises substantial control over the entity, or (2) owns or controls 25% or more of the ownership interest of the entity.

The data reported to FinCEN will be held in a secure, non-public database, and it will not be available to the public generally.

**When Does the Initial Report Need to be Filed with FinCEN?**

- Entities formed after January 1, 2024 have 90 days after they are formed to file their initial BOI report with FinCEN.

- Entities formed before January 1, 2024 have until January 1, 2025 to file their initial BOI report with FinCEN.

BOI reporting is not an annual process. However, if information changes for the reporting company or any of its beneficial owners, the entity will need to file an updated BOI report.

**How Can FMJ Help With the CTA?**

FMJ is available to help families and all types of business entities determine if they are obligated to file a BOI report. This can be a complicated analysis. We are also helping clients to identify beneficial owners, to implement a system for gathering the information required for reporting, and to determine the best way to track and update BOI reporting information when needed. We recommend that people speak with their primary attorney contact at FMJ as soon as possible, but no later than September 2024 for assistance. 

If you would like to discuss any of the issues discussed above or anything else related to estate planning, our [**Trusts & Estates**](https://66bgw9nab.cc.rs6.net/tn.jsp?f=001-All-AgsacaCH9XdUEG78oSbodz1R_iQP7DQJ_CRjsgyGdjRNeuooNNXPksSNQUE87_Nw9uTdsvVMqloX-ITJdd4riWIGKdQBqzSAd8-dbXgaxxhPUWICO-yo4S7xiQEC4JaA3EDOAAQXVBnxKnyMCjLaihryQndH9kx27dfHxLDdw6Q3X1NiZ6sZSCrysyb&c=&ch=) group can help. Please reach out soon!

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