Wisconsin’s marital property laws impact compliance with the Corporate Transparency Act (the “CTA”). As discussed in other Ruder Ware CTA Focus Team insights, the CTA requires a “reporting company” to report information about its “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”). The CTA defines a beneficial owner as “any individual who, directly or indirectly, exercises substantial control over a reporting company or owns or controls at least 25 percent of the ownership interests of a reporting company.”

In Wisconsin and other marital property states, most property acquired during marriage, subject to statutory and contractual exceptions, is considered jointly owned by both spouses and is classified as “marital property.” Therefore, in marital property states, the spouses of certain beneficial owners, despite not directly holding an ownership interest in a reporting company, likely need to be included on the company’s report to FinCEN as beneficial owners.

When determining whether an individual is a beneficial owner in the context of a CTA analysis, marital property laws likely do not provide for joint substantial control amongst spouses, but they do likely provide for joint ownership. For example, assume Jane lives in Wisconsin, is the CEO of a reporting company, but does not have an ownership interest in the company. As CEO, Jane is likely considered a senior officer and beneficial owner due to her substantial control of the company. Jane’s husband, Paul, does not work for nor have any involvement with the company. Since Jane’s status as beneficial owner arises from her role as a senior officer rather than from an ownership interest, Paul would not be classified as a beneficial owner. In contrast, if Jane owned more than 25% of the ownership interest in the company, then Paul would also be a beneficial owner due to his marital property interest.

Reporting companies must consider marital property laws when analyzing beneficial ownership. If you have any questions about beneficial ownership or the CTA, please contact Ruder Ware at cta@ruderware.com.  If you are interested in receiving updates on the CTA, please subscribe here.

Morgan Boyd, summer associate, contributed to this blog post.