By Daniel B. Axman, Trusts & Estates Partner
Overview
Over the past few years, entities have come under scrutiny as lawmakers push for greater transparency in ownership and control through new reporting procedures. And while the federal reporting requirements have been significantly scaled back, New York appears determined to forge ahead, albeit only as it applies to limited liability companies (LLCs).
In this Golenbock Legal Alert, we provide an overview of how New York’s reporting rules apply to trusts and estates.
Federal Update: The Corporate Transparency Act (CTA)
In March 2025, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an interim final rule significantly narrowing the scope of entities required to submit a beneficial ownership information (BOI) report under the federal Corporate Transparency Act (CTA), originally enacted in 2020.
Entities formed under state law, such as LLCs and corporations, are no longer required to submit a BOI Report to FinCEN. The revised rule now applies only to entities formed under foreign law that register to do business in the U.S. (formerly known as “foreign reporting companies”).
(See: Golenbock Legal Alert: “FinCEN Issues Interim Final Rule: U.S. Companies Exempt from BOI Reporting, Foreign Entities Still Required to File”)
New York LLC Transparency Act (NYLTA)
While the future of federal BOI reporting remains uncertain due to ongoing legal challenges, New York has forged ahead with its own transparency mandate, the New York LLC Transparency Act (NYLTA), modeled in part on the federal CTA but with key distinctions. To read Golenbock’s alert on the NYLTA, click here.
NYLTA Effective Date:
January 1, 2026
LLCs Subject to the NYLTA:
- LLCs formed under New York law
- LLCs authorized to do business in New York
Exempt LLCS: LLCs that are formed under New York law or authorized to do business in New York may qualify for one of 23 exemptions, which can be found here: https://www.fincen.gov/boi-faqs#C_2. If an exemption applies, the LLC is not required to file a BOI report, but it must still file an attestation of exemption with the NY Department of State.
We will refer to an LLC that must file a BOI Report as a “Reporting LLC”.
Initial BOI Report Filing Deadlines:
- Reporting LLCs formed before January 1, 2026: January 1, 2027
- Reporting LLCs formed on or after January 1, 2026: 30 days from date of formation or registration to do business in New York
Annual Filing:
All Reporting LLCs are required to file an annual statement to confirm or update the BOI report.
Confidentiality:
The BOI reports will be kept on a secure database and will not be accessible to the public.
General BOI Reporting Requirements:
A BOI report must be filed by a “beneficial owner”, which includes: (1) any individual who, directly or indirectly, exercises substantial control over the Reporting LLC; and (2) any individual who owns or controls at least 25% of the ownership interests of the Reporting LLC.
BOI Reporting Requirements for Trusts:
The analysis becomes murkier when a trust is involved. First it must be determined whether the trust (1) directly or indirectly exercises substantial control over the LLC or (2) owns or controls at least 25% of the ownership interests of the LLC
If the answer is “yes”, then all of the following individuals must be included in the BOI Report as beneficial owners:
- A trustee or other individual with authority to dispose of trust assets
a. Key Point: If the trust agreement grants powers to a trust protector, investment advisor, or distribution advisor, the trust agreement must be reviewed carefully to determine whether these individuals possess a right to dispose of trust assets. - A beneficiary who is the sole permissible recipient of trust income or principal
- A beneficiary who has the right to demand a distribution of or withdraw substantially all of the trust assets.
a. Key Point: Many trusts, especially those holding a life insurance policy, include “Crummey” withdrawal rights (these are temporary beneficiary withdrawal rights included in the trust agreement so that the grantor’s gift to the trust can qualify for the annual exclusion from gift tax – currently $19,000). An analysis must be undertaken to determine whether the beneficiary’s Crummey withdrawal rights entitle the beneficiary to withdraw substantially all of the trust assets.
b. Key Point: If a beneficiary is given a lifetime power of appointment, which is the power to direct how the trust assets are distributed, then the beneficiary would be considered a beneficial owner. This type of power is sometimes given to a spouse who is the beneficiary of a Spousal Lifetime Access Trust (SLAT). - A grantor/settlor (generally the person funding the trust) who has the right to revoke the trust or withdraw assets from the trust.
a. Key Point: Many trusts are established as “grantor trusts”. A grantor trust is disregarded for income tax purposes – therefore, the trust’s income is reported on the grantor’s income tax return. Many clients favor these trusts because the grantor’s annual payment of the trust’s income tax is the equivalent of the grantor making a tax-free gift to the trust. For the trust to be considered a grantor trust, the trust agreement often gives the grantor the right to substitute assets or to borrow from the trust. In such a case, the grantor should be considered a beneficial owner.
b. Key Point: Many clients now favor revocable trusts instead of last wills – one reason being that a revocable trust can avoid probate court proceedings after the grantor’s death. Since a grantor can revoke a revocable trust, the grantor is considered the beneficial owner.
Agents acting under a Power of Attorney are not considered Beneficial Owners.
BOI Reporting Requirements for Estates:
A Reporting LLC must report a beneficial ownership change within 30 days of when an estate is settled. Practically speaking, once an executor or personal representative transfers a Reporting LLC to the estate beneficiaries, the Reporting LLC should immediately report the beneficial ownership change.
Minor Beneficiaries:
If a beneficiary is a minor, then the minor’s parent or legal guardian is considered the beneficial owner.
Penalties:
Unlike the CTA, if a beneficial owner fails to file a BOI report, he or she will not be subject to criminal penalties. Failure to comply with the reporting requirements can, however, result in a past due delinquent status, suspension from conducting business in the state, or dissolution of the LLC. The NY attorney general is granted broad discretion, including the ability to fine a beneficial owner up to $500 per day that the LLC is past due or delinquent with its filings.
Practical Guidance for Fiduciaries:
Whether you are a trustee, executor, or another person with powers granted in a trust agreement or last will, such as a trust protector or investment advisor, it is important that you understand how the NYLTA applies to you.
- Work with your lawyer to determine whether the trust or estate you are involved with owns a Reporting LLC. This analysis includes determining whether an exemption to reporting applies.
- Work with your lawyer to review trust agreements and last wills in order to identify the persons who are considered beneficial owners.
- Ensure the trust or estate lawyer and accountant are aware of the reporting deadlines.
- If administering a trust or estate with multiple LLCs, consider centralizing compliance through a designated agent.
- Keep records of all BOI filings and document your decision-making process and reliance on legal counsel.
Practical Guidance for Estate Planners:
- Audit Existing Structures. Review all trust and estate plans that hold interests in LLC formed in New York or qualified to do business in New York.
- Client Outreach. Contact clients to inform them of filing deadlines and set calendar reminders for annual check-ins. Include BOI reporting on client in-take forms, checklists, and memos.
- Consider New Trust Language. Consider adding language to trust agreements, last wills, and LLC operating agreements that (1) authorizes fiduciaries to collect and report information required under the NYLTA and (2) indemnifies fiduciaries who may face penalties for non-compliance.
- Plan for Privacy Concerns. While the information reported may not be publicly accessible, clients may still be wary. Help them understand the information collected, who can access it, and how it is protected.
- Forming New LLCs. Before forming a new LLC in New York, determine whether it would be subject to BOI reporting, and if yes, determine whether it makes sense for the client to form the LLC in another jurisdiction, such as Delaware, and communicate any additional costs or reporting requirements to the client.
Key Takeaway
While federal reporting obligations under the CTA have been significantly scaled back, New York’s LLC reporting regime is ramping up. Estate planners, accountants, trustees, executors, and others who have certain trust powers should treat this as a critical compliance moment, not just a regulatory formality. Proactive steps now can help avoid liability later.
Contacts
If you have questions about the application of the NYLTA, please contact a member of Golenbock’s Trusts & Estates team.
| Daniel B. Axman daxman@golenbock.com (212) 907-7379 | Steven G. Chill schill@golenbock.com (212) 907-7350 |
| Donald Hamburg dhamburg@golenbock.com (212) 907-7380 | Hailey Dobin Reichel hdobinreichel@golenbock.com (212) 907-7312 |
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