Corporate Transparency Act, Costs, and Fiduciary Pitfalls

Fiduciary assets must be managed with strict administrative discipline to prevent creditors from “piercing the corporate veil” (holding members personally liable). Under California law, a court can pierce the veil if the LLC is shown to be a mere alter ego of the owners, characterized by commingling of assets, undercapitalization, or a failure to maintain separate books.

Federal and State Disclosure Requirements

Under the Corporate Transparency Act (CTA, 31 U.S.C. §5336), domestic entities were briefly required to file Beneficial Ownership Information (BOI) with FinCEN. However, under the March 26, 2025 FinCEN interim final rule, BOI reporting obligations were removed for U.S.-formed entities and U.S. persons. Only foreign-formed entities registered to do business in the U.S. remain subject to federal BOI filings.

Nonetheless, you must monitor state-level transparency acts. For example, the New York LLC Transparency Act (N.Y. Ltd. Liab. Co. Law §§1106–1108, effective January 1, 2026) requires NY-formed or registered LLCs to disclose beneficial owners in a state database, and other states are proposing similar disclosures, eroding entity-level anonymity.

Do not mistake the BOI rollback for the end of FinCEN’s interest in your real estate. A separate Residential Real Estate rule (31 CFR 1031.320) would require the settlement professional at closing to report any non-financed transfer of residential property to a legal entity or trust. All four conditions must be met: the property is residential, the transfer is non-financed (no institutional mortgage), the transferee is a covered entity or trust, and a reporting person handles the closing. That catches exactly the move estate planners make routinely—dropping a paid-off home or a rental into a family LLC or an irrevocable trust.

The rule took effect on March 1, 2026 and was vacated on March 19, 2026 by the U.S. District Court for the Eastern District of Texas, which held that FinCEN exceeded its statutory authority. Two other courts had upheld it, and the government is appealing, so nothing is reportable while the vacatur stands and the position could reverse on appeal. Plan as though it comes back: the drafting is easy to comply with, and the exemption for funding your own revocable living trust—where the grantor is the transferor, and especially by self-recorded deed with no settlement agent in the chain—was always the point.