Trust stakeholders are subject to Corporate Transparency Act (“CTA”) obligations under specific circumstances. Under CTA, a “reporting company” must disclose information about the company and its “beneficial owners.” CTA defines a “reporting company” as any entity that is created by filing a document with a secretary of state or any similar office. A “beneficial owner” is defined as any individual who, directly or indirectly, (a) exercises substantial control over a reporting company or (b) owns or controls at least 25 percent of the ownership interests of the reporting company.

In Wisconsin, a trust is not created by filing a document with a state office. Therefore, a trust created in Wisconsin is not a reporting company subject to CTA obligations. Additionally, a trust is not a “beneficial owner” under CTA because only individuals can be beneficial owners. However, the stakeholders of a trust, such as a grantor, trustee, trust protector, and beneficiary, may be beneficial owners of a reporting company. Note that trusts created in other states that require a filing with a state office for creation may have additional CTA reporting obligations.

As an example, assume Josh lives in Wisconsin and is the trustee of a trust (the “Trust”). In this scenario, the Trust does not have a CTA reporting obligation because it was created without filing a state document. Now, assume the Trust is the sole member (owner) of a limited liability company (the “LLC”), which has a CTA reporting obligation. Here, the Trust is still not a reporting company, and the Trust is not a beneficial owner of the LLC because the Trust is not an individual. However, Josh, in his role as trustee, is likely a beneficial owner of the LLC because he has substantial control over the LLC. This scenario requires the LLC to disclose CTA reporting information about itself, Josh, and any other beneficial owners.

As this example illustrates, CTA analysis requires extensive review when a trust is involved.