In most cases, a trust is not a reporting company because it is not created by filing a document with a U.S. state or tribal authority. However, when a trust has ownership of a reporting company, identifying the beneficial owner(s) becomes more complex.
Under the CTA, beneficial owners are defined as individuals who:
- Exercise substantial control over the reporting company, or
- Own or control at least 25% of the company’s ownership interests.
When a trust is an owner of a reporting company, beneficial ownership may involve the following individuals based on their roles or control over the trust:
1. Trustee(s)
The trustee is often considered a beneficial owner because they generally manage the trust’s assets, including any ownership interest in the reporting company.
2. Beneficiaries
A beneficiary may qualify as a beneficial owner if they:
- Hold the right to withdraw funds or demand distributions from the trust, and
- Such distributions total 25% or more of the reporting company’s ownership.
3. Settlor (Grantor)
The individual who creates the trust (the settlor or grantor) may be deemed a beneficial owner if they:
- Retain the power to revoke the trust, or
- Otherwise maintain control over the trust’s assets.
4. Other Individuals
Anyone else who exercises direct or indirect substantial control over the trust’s ownership interest in the reporting company may also qualify as a beneficial owner.
Key Takeaway: Determining beneficial ownership for a trust under the CTA requires analyzing the specific roles, rights, and control exercised by individuals associated with the trust. If you're unsure, consult with a legal professional to ensure accurate reporting.
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