The blog reports information of interest to seniors, their families, and caregivers. Recurrent themes are asset and decision-making protection, and aging-in-place planning.
The Treasury Department is announcing today that, with respect to the Corporate Transparency Act ("CTA"), not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
U.S. Secretary of the Treasury Scott Bessent issued the following statement:
"This is a victory for common sense. Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy."
Prior to this announcement, there was a great deal of uncertainty regarding the risk of non-compliance with the Act's reporting requirements. There were several lawsuits seeking to block implementation of the Act. On January 7, 2025, the U.S. District Court for the Eastern District of Texas issued an order staying FinCEN’s regulations implementing the BOI reporting requirements, precluding FinCEN from requiring BOI reporting or otherwise enforcing the CTA’s requirements. On February 5, 2025, the U.S. Department of Justice—on behalf of Treasury—filed a notice of appeal of the district court’s order and, in parallel, requested a stay of the order during the appeal.
On February 18, 2025, the court agreed to stay its January 7, 2025, order until the appeal is completed. Given this decision, FinCEN’s regulations implementing the BOI reporting requirements of the CTA were no longer stayed. Thus, subject to any applicable court orders, BOI reporting was finally mandatory, but FinCEN notified the courts and the public that it would be providing additional time for companies to report.
The United States Corporate Transparency Act (the “CTA”) became effective at the start of 2024. Under the CTA, your company may have been be required to report its “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Treasury Department charged with protecting the US financial system from illicit use, fighting money laundering and promoting national security. Failure to report risked significant fines and penalties for both companies and for their beneficial owners. The law also exempted large and publicly traded companies. focusing instead on smaller entities, like small limited liability companies, corporations, and partnerships.
The CTA requires non-exempt existing companies to file a report with FinCEN before the end of the 2024 calendar year and requires companies that are newly created or registered to file a more detailed report within 90 days after the company is first organized or registered in the US. The CTA also requires companies to update these filings within 30 days of any change in previously filed information.
The CTA only applies to organizations that either(a) are formed by making a filing with a state’s Secretary of State (or other office charged with forming entities) or (b) are foreign companies that have registered to do business in the United States by making a filing with a state Secretary of State (or other office). So, the CTA does not apply to sole proprietorships, general partnerships or (depending on state) unincorporated nonprofit associations, or trusts.
The CTA contains 23 exemptions for various types of companies. Most of these exemptions are for companies which are already subject to a high amount of regulation, such as public companies, banks, insurance companies, other types of financial firms and utilities. There are also exemptions for certain types of entities where either Congress or FinCEN believed the burden of reporting would be inappropriate or unnecessary. These include tax-exempt entities, including most charities, and certain inactive entities. Importantly, The CTA also has an exemption for larger companies who meet certain employment and income thresholds and which also have operating offices in the U.S.
In this article we return to the saga of James Howells, the subject of a previous article on this blog, as he continues his years-long battle to get back a hard drive that contains a discarded bitcoin key currently worth somewhere around $800 million by offering to purchase a landfill in Great Britain in an effort to find the wallet before it closes down. James Howells had repeatedly requested that the Newport City Council, in South Wales, grant him access to the mountains of waste to find the hard drive that was accidentally discarded in 2013.
When his repeated requests were denied, he offered to fully fund the excavation process and share 25% of the recovered Bitcoin with the Newport City Council. When that offer was rejected, he filed a lawsuit to compel the Council to accept his offer. The lawsuit seems to be in the vein of 'taxpayer" suits common in the U.S. where a taxpayer contests some official act or denial as wasteful of taxpayer dollars. That case, however, ended with a judge dismissing his claim holding that Howells had “no reasonable grounds” for bringing the claim and that there was “no realistic prospect” of success if the case were to proceed to a full trial."
Whether this is a welcome or ominous development for Mr. Howells remains to be seen. Mr. Howells has not given up, though, as he is now proposing to purchase the landfill. His plan involves either reclaiming and remediating the landfill and turning it into a park, or re-launching it as a landfill.
Mr. Howell's predicament underscores the risks and challenges of cryptocurrency investing beyond just the risk of investment. Digital currencies have digital or virtual 'keys" that must be protected. For more information, please consider the following:
A recent case provides an object lesson for those in a second marriage who either have a trust separate from their spouse, or have retained their original trust upon remarriage. The case is also instructive regarding trust funding in general.
Only a properly and completely funded trust protects your estate planning choices. A pour-over will does not magically repose assets in your trust upon death; it must be probated in order to be effective, at least in most states. Probate means risk, cost, and expense. A pour-over will is subject to the same limitations, requirements, risks, costs, expenses, advantages and disadvantages and rewards as any will created where there is not trust. One of these risks is spousal claims.
The Montana Supreme Court held that a widow could claim a spousal elective share of the deceased husband's estate, notwithstanding that her deceased husband’s will directed everything to his trust, and, by implication, even if the trust provides a substantial share to the surviving spouse. In Silverwood v. Tokowitz(Mont. No. S-23-0114, January 12, 2024).
Carol Tokowitz was married to her husband, Neal Tokowitz, for 30 years before he died. Mr. Tokowitz left behind surviving children from a previous marriage. He had a pour-over will that funded a revocable living trust. His will did not name his wife or anyone else as a beneficiary, but, as is customary, directed assets only to the trust.
Mr. Tokowitz's executor, Mr. Silverwood, filed a petition to probate the will, suggesting that some assets or property were not owned or controlled by the trust. Mrs. Tokowitz asserted her rights to the elective share of her late husband’s estate under the Wyoming spousal elective share statute.
An elective share is a term used to describes a proportion of an estate which the surviving spouse of the deceased may claim in place of what s/he was left in the decedent's will. It may also be called a widow's share or statutory share, or described as an election against the will, or a forced share. In Ohio it is governed by Ohio Revised Code 2106.01 (last accessed 2/10/2025), and is often described as a surviving spouse "taking" against the will. In Missouri, it is governed by Section 474.160 of the Revised Statutes of Missouri (last accessed 2/10/2025).
The Wyoming spousal elective share statute provides that a married person domiciled in the state must provide a spouse at least an elective share subject to distribution in the will. If, as in this case, the surviving spouse is not a parent of the decedent’s surviving children, the elective share is a quarter or twenty-five (25%)of the estate.
The probate court granted Mrs. Tokowitz her spousal share. Mr. Silverwood and a trustee, Randy Green, (hereafter referred to simply as "Mr. Tokowitz's family") argued that she was not entitled to take a spousal elective share and that taking an elective share should prevent her from receiving anything from the trust. In essence, Mr. Tokowitz's family was arguing that granting her an elective share, on top of a percentage of the assets in the trust estate permitted Mrs. Tokowitz to receive more that Mr. Tokowitz intended her to receive. Indeed, given an elective share of the probate estate, it is likely that Mrs. Tokowitz's total inheritance exceeded that which she would have received if all assets had been reposed in the trust at death. A hypothetical illustration follows:
The probate court declined to make any ruling regarding disposition of the trust estate. Mr. Tokowitz's family appealed.
Mr. Tokowitz's family first argued that although Mr. Tokowitz was a Wyoming resident, he was not domiciled in Wyoming full-time. A domicile is a legal residence where a person intends to stay. A person can have many residences but only one domicile. The Supreme Court rejected the argument. The petition to probate the will (filed by Mr. Tokowitz's family) will stated that he was a resident of Park County, Wyoming, but the pour-over will stated that he was domiciled there. According to the court, since the will presented evidence that the decedent’s domicile was in Wyoming, Mrs. Tokowitz met her burden of establishing a Wyoming domicile. The burden then shifted to Mr. Tokowitz's family to disprove the statement in the will, and they failed to show that Mr. Tokowitz was domiciled elsewhere. According to the Supreme Court, it was sufficient that the probate court implied that Mr. Tokowitz was domiciled in Wyoming when the will was created and executed, and applied Wyoming law to determine Mrs. Tokowitz's elective share. In other words, the probate court did not make an explicit "finding" regarding Mr. Tokowitz's domicile.
The Tokowitz's family's next argument concerned the amount Mrs. Tokowitz would receive under the trust. They asserted that the probate court should not have given her the elective share because it did not know whether she would receive more or less than a quarter of the estate under the trust. The Supreme Court dismissed the argument holding that the trust’s terms are not relevant to the probate estate. The spousal elective share statute solely pertains to the will. Mr. Tokowitz’s will only left his property to his trust and did not name his wife, which effectively entitles her to the spousal elective share statute.
Finally, Mr. Tokowitz's family claimed that the property was not subject to probate because the will poured all assets and property into the trust. Property that passes by way of a pour-over will, however, is part of the probated estate and subject to the spousal elective share. Assets that transfer through a pour-over will are not exempt from the probate estate, or its rules and regulations simply because they estate assets ultimately repose to a trust.
The Supreme Court held that the lower court did not err when it declined to rule on Mrs. Tokowitz’s interests in the trust, holding that once the assets pass to the trust, they become non-probate assets. The Supreme Court could find no case law or statutory authority supporting a ruling on non-probate assets in the probate case.
The Supreme Court of Montana held that the district court correctly allowed Mrs. Tokowitz to take a spousal elective share, and that the lower court rightly determined that it lacked jurisdiction to rule on claims arising from the trust.
This case became very complicated by the circumstances and the law. One assumes the value of the assets warranted appeal to the Montana Supreme Court. All of the complexity, cost, and expense would have been unnecessary if the property and/or assets were funded to the trust prior to Mr. Tokowitz's death.
In the video above, I discuss a recent MSN.com article entitled "Five Items to Leave Out of Your Revocable Living Trust." (the article link is already broken, but there is an image in the video, and you can also view the article online here(last accessed 1/18/2025); you will have to scroll down past the first few articles).
The author writes as follows:
"Vehicles. Whether it’s a ’63 Corvette, Harley chopper or prop plane, all that’s required to pass it on is a simple written instruction to transfer the title to a beneficiary. In a trust, you’re exposed to lawsuits over accidents that involved the vehicle."
Generally, I disagree. Vehemently.
In the video, I discuss the following:
1. Articles, publications, seminars, and presentations should never be construed as legal advice
2. The author suggests that only a simple written instruction is necessary to transfer a title to a beneficiary, which statement is misleading or incorrect.
3. Beneficiary and Transfer on Death Designations may sometimes work to avoid probate, but they have limitations and risks, and do not constitute a 'plan' to avoid probate (see links below).
4. The liability issue raised by the author makes no sense for most revocable living trusts settled in most states.
5. The author assumes that the only purpose of a revocable living trust is to avoid probate, which is untrue, and assets outside of a trust do not serve and may impair lifetime planning benefits of a trust:
Consistent and competent lifetime management of assets is a lifetime planning objective best accomplished with a trust.
Guardianship avoidance is a lifetime planning objective best accomplished with a trust.
Protection of assets from a court-appointed guardian is a lifetime planning objective that can only be accomplished with a trust.
Aging in Place Planning is a lifetime planning objective that can only be accomplished with a trust.
I acknowledge in the video that there are always exceptions, and that the author may not have actually been considering revocable living trusts when drafting the article, but generally I disagrees with the headline and conclusion of the author regarding planes, trains, and automobiles.
I urge you to attend an "Aging in Place Planning" presentation by signing up for an upcoming live webinar. You can find these periodically on my blog or on the events page of the firm's Facebook page. You don't need to wait, however, for a scheduled event; there is a recorded version available here: https://bit.ly/Aging-in-Place-Workshop. You might also consider inviting your children and trusted advisors to attend.