On January 1, 2024, the Corporate Transparency Act (“CTA”) went into effect, requiring the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) to collect beneficial ownership information (“BOI”) from corporations and limited liability companies (“LLCs”) registered in the U.S.
A beneficial owner is an individual who, directly or indirectly, exercises substantial control over a “reporting company” or who owns or controls at least 25% of the ownership interests of the company. The mandatory disclosures include the individual’s full legal name, date of birth, address, and a unique identifying number such as an EIN or Social Security number, or an identification number issued by FinCEN. BOI information is reported through the Beneficial Ownership Secure System (“BOSS”), which is a “a non-public, secure registry” managed by FinCEN.
The cost of non-compliance can be highly punitive: Failure to disclose the required information to FinCEN may be subject to severe civil and criminal penalties, including a fine of up to $250,000 or imprisonment up to five years.
What is Considered a Reporting Company?
The CTA regulations apply to “reporting companies,” which are further delineated as Domestic and Foreign Reporting Companies. Virtually any company established by filing organizational documents with a Secretary of State of any U.S. state is a “reporting company” and is subject to the reporting requirements. Even single member or trust-owned LLCs created anywhere in the U.S. are subject to the disclosure rules.
Almost all U.S. domestic LLCs are Domestic Reporting Companies, even if they were only established for personal wealth structuring purposes.
A Foreign Reporting Company is an entity established outside the U.S. that is registered to do business with a Secretary of State (or equivalent office). Foreign companies that are not required to register to “do business” are NOT foreign reporting companies under the CTA regulations. Each state’s statutes and the rules enacted by the various secretaries of state determine what level of activity constitutes “doing business” in the state. If a particular locality does not require a foreign company to register to do business, it is not considered a Foreign Reporting Company under the CTA regulations.
How Are Trusts Affected by the CTA?
Importantly, trusts are not “reporting companies” and are not subject to the CTA disclosure rules. Of course, there are scores of different types of trusts and many attractive trust jurisdictions that may provide appropriate planning solutions. The tax characteristics, privacy, and protection offered by a trust depends entirely on the type of trust, where it’s established, and how it’s managed.
Planning for non-disclosure of beneficial owner information to the FinCEN database requires careful analysis to determine if the foreign entity is exempt from the disclosure rules or if a certain type of trust framework achieves broader wealth planning objectives. Clients who place a high premium on privacy and who wish to keep their personal information out of a national “Financial Crimes” database should seek legal counsel to determine how to structure their entities with the CTA in mind. Bespoke Group actively works with its clients to navigate these reporting requirements while optimizing for privacy.
Why FinCEN’s Regulations Endanger the Right to Privacy
For decades, LLCs have been used both to enhance asset protection and to provide privacy for personal use holdings like vacation homes, non-mortgaged primary homes, or personal & family investment portfolios. It has been standard wealth planning practice to use trust-owned LLCs in robust privacy jurisdictions like Wyoming or South Dakota to allow affluent clients to hold real estate or other family assets in private structures, often within tax-advantaged irrevocable trusts. Financially and commercially successful individuals understandably seek to preserve their privacy and protect themselves and their family from curiosity seekers or from those with nefarious intent to harm the client or the client’s family.
The requirement for LLCs created and registered in the U.S. to report personal information to a federal database managed by the Financial Crimes Enforcement Network raises valid concerns for individuals focused on protecting their privacy.
These regulations and reporting processes may significantly affect the right to privacy for many individuals and families in the U.S. Personal information stored within a financial crimes database is not guaranteed to be protected from a data breach, and digital records are effectively permanent historical and traceable records. Furthermore, with these regulations in place, efforts to protect one’s privacy through an LLC structure puts individuals in the uncomfortable position of being tracked within a financial crimes database. Many people prefer the ability to protect their privacy without coming under the scrutiny of financial crimes enforcement agencies or any type of criminal enforcement agency.
A Precedent Has Been Set
Another important factor to consider is the potential expansion of this act over time, resulting in additional beneficial ownership information being collected at the federal and state level. Now that a precedent has been set, expanding the scope of information that could be collected in the future is potentially a lower hurdle.
Since the initial rollout of the CTA, various states have been working on their own reporting requirements, often focusing on narrower categories of “reporting companies”. In addition to placing greater administrative burdens on individuals and corporations, state-level BOI collection will likely raise concerns regarding privacy and could potentially increase the risk of data breaches as this information is stored in a separate database. Moreover, states may implement more frequent data collection timelines, and companies that do not adhere to these requirements could face additional fines and penalties.
Our Focus on Privacy
Privacy is generally understood to be a fundamental human right and preserving and protecting the privacy of our clients is central to our services. Our team is dedicated to providing industry-leading wealth management solutions, and privacy is a key factor in every decision we help our clients make. The Corporate Transparency Act presents new challenges for our industry, and in an ever-changing regulatory environment, Bespoke will always look for opportunities to optimize for privacy while maintaining compliance with existing regulations.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.
This information is intended for general educational purposes only and should not be construed as legal or investment advice.
On Day 3 of the Onchain Giving Summit hosted by Endaoment, Bespoke founder Matt McClintock speaks to Adam Blumberg, Bespoke Client Services Associate and co-founder of Interaxis, about the importance of incorporating philanthropy into estate planning.
Navigating the intersection of charitable giving and tax planning can unlock significant financial and philanthropic opportunities. Whether you’re looking to maximize your tax benefits, manage appreciated assets, or support causes you care about, various strategies can enhance both your financial plan and charitable impact.
Maximizing Tax Benefits Through Charitable Giving in Estate Planning
Charitable giving is a powerful way to support causes you care about, and it can also play a key role in estate planning. Whether making outright gifts to family members or donating to charitable organizations, there are significant tax benefits available. For cash gifts to qualifying charities, you can deduct up to 60% of your adjusted gross income (AGI). Donations of property, such as real estate, offer deductions ranging from 20% to 50% of AGI, depending on the type of asset and charity. Thoughtful philanthropy not only helps others but can also create lasting tax advantages for your estate.
Navigating Charitable Donations of Cryptocurrency: Timing and Appraisals
When donating cryptocurrency or digital assets to charity, it’s essential to establish the value at the time of the gift. For tax deduction purposes, the gift must be supported by a qualified appraisal, just like any other donation. Fortunately, there are expert appraisers who specialize in valuing digital assets like Bitcoin, ensuring accurate reporting for charitable contributions.
Raise Your Charitable Impact with a Donor-Advised Fund
Donor-advised funds (DAFs) are a smart, flexible option for individuals looking to make large charitable gifts but aren’t yet sure where to direct the funds. After experiencing a major income tax event, many donors want to secure a significant charitable deduction without needing to decide immediately which charities to support. A DAF allows donors to contribute now, receive the tax benefit, and take their time selecting causes to fund later. It’s an ideal solution, especially when gifting non-traditional assets like cryptocurrency. With tools like DAFs, philanthropy becomes more adaptable, offering greater control and financial benefits for donors.
Leverage Charitable Lead Trusts for Tax Benefits and Future Generational Wealth
A charitable lead trust offers a strategic way to support charities while benefiting your heirs. By establishing this trust, you direct it to make fixed annual payments to a qualifying charity, such as a donor-advised fund or family foundation, for a specified term (e.g., 10 or 20 years). At the end of this period, any remaining trust assets transfer gift-tax-free to your chosen beneficiaries, like your children. Additionally, you can receive an upfront tax deduction based on the trust’s initial value. This setup not only supports charitable causes but also provides tax advantages and protects your heirs’ future interests.
Unlock Tax Benefits and Charitable Impact with a Charitable Remainder Trust
A Charitable Remainder Trust (CRT) is a savvy tool for managing appreciated assets like Bitcoin or ETH while supporting charitable causes. By transferring these assets into a CRT, you avoid immediate capital gains taxes when the trust sells them. Instead, you receive an income stream from the trust for a set period or for life. At the end of this term, the remaining assets go to your chosen charity. This strategy not only maximizes your charitable impact but also provides you with tax benefits and ongoing income, making it a powerful option for both philanthropy and financial planning.
This information is intended for general educational purposes only and should not be construed as legal or investment advice.
Large financial institutions are often known for their global reputation, robust resources, and established trust. But when managing significant wealth, it’s critical to look beyond the name and ask these questions to truly understand who is helping manage your wealth.
How do you ensure that your unique interests are prioritized?
Are the relationships with your advisors meaningful and built to last?
Is the institution’s commitment to your success consistent and aligned with your long-term goals?
These are questions worth considering regardless of the size of the wealth manager. However, they are easier to answer when you work directly with individuals who understand your personal journey and are invested in your future. This is where smaller Private Wealth Managers (PWMs) and Multi-Family Offices (MFOs) offer distinct advantages.
Alignment of Interests and Incentives
Large financial institutions often have proprietary investment funds they are incentivized to promote. This can complicate decisions about what’s best for the client. We do not offer any in-house investment products, nor do we have investment quotas. Our sole focus is on providing strategic guidance that aligns with the client’s personal objectives.
Another way we align our services with our clients is by operating on a fixed-fee model rather than hourly rates. This approach encourages a regular and ongoing dialogue with our clients and allows flexibility to modify strategies as needed. This model reduces any stress or concern about billable hours and helps us to focus on the client’s long-term success.
We measure success not by assets under management but by the impact we help our clients create.
Discretion and Privacy
Discretion and privacy are often underappreciated in wealth management but can be critical when it comes to inheritance and legacy planning. Large institutions often do not prioritize privacy in a way that smaller firms do.
At Bespoke, we emphasize discretion throughout the wealth management and inheritance transfer process. From safeguarding your assets from potential creditors to structuring your inheritance to avoid public judicial proceedings, our strategies are designed with privacy in mind. We believe in taking ownership of this process and being proactive to ensure that you retain as much control as possible over how your wealth is distributed.
Self-sovereignty is planning for and exercising your ability to maintain control of the process and keep your financial affairs outside of the public court system. Working with a small, trusted team of advisors like ours allows for more careful planning, ensuring that your personal affairs remain private, both during your lifetime and after.
A Personal Approach and Building Long-Term Relationships
It can be easy for large institutions to fixate on investment returns and lose sight of what matters most—your legacy, values, and protecting your family’s future. Achieving this depth of understanding can be challenging with larger institutions, where the relationship may feel impersonal and transactional.
Wealth management should be considered in the context of how you can live the best version of your life by leveraging your wealth and creating a framework for your family and future generations to do the same. Clients must think deeply about what their wealth means to them. At Bespoke we ask our clients ‘what kind of life do you want your children to have? How can you ensure that your values are passed on and respected?’ Legacy planning is about properly preparing the transfer of ownership to future generations in a thoughtful and organized way. For a thoughtful conversation on these topics, please listen to our Co-founder Matt McClintock’s conversation with Jacob Shapiro (Head of Geopolitical & Macro Research, Senior Client Relationship Manager, Bespoke) on The Jacob Shapiro Podcast – Matt McClintock: The Good Life and Personal Sovereignty: Introducing Bespoke.
Smaller MFOs focus on building long-term relationships with a foundation of trust and respect. By deeply understanding the client’s family dynamics, personal goals and financial aspirations, we create tailored strategies that reflect not just financial goals but generational legacies. This is difficult to replicate at larger institutions, where the volume of clients and conflicting priorities can dilute personal attention.
Comprehensive and Holistic Planning
There are many variables at play and implications to consider in estate planning, with smaller PWMs and MFOs uniquely positioned to offer guidance and planning that is more thoughtful and holistic. Larger institutions may offer similar services, but smaller firms with highly experienced and knowledgeable advisors excel in designing comprehensive, cohesive and one-of-a-kind wealth strategies.
At Bespoke, we offer a fully integrated service that includes investment management, tax mitigation, estate planning, philanthropic strategies, and specialized asset protection. Our clients often seek privacy, the protection of wealth from predators, family-controlled governance structures, and customized solutions to manage complex or concentrated assets.
We also work closely with clients to strategically deploy financial capital to their communities in ways that align with their values. In The Last Trade: The Bitcoin Heritage Blueprint with Matt McClintock (1:25:05), Matt describes multiple examples of UHNWIs who have made commitments to improve communities that are deeply important to their lives.
Customized Investment Solutions
Smaller PWMs and MFOs often provide more flexible and tailored investment strategies than large institutions, which can be limited by standardized offerings. At Bespoke we can design strategies that reflect our client’s unique risk profile, family dynamics, and long-term goals. We aren’t bound by institutional mandates or investment quotas, allowing us to focus entirely on what makes sense for each client.
This includes managing risk across multiple jurisdictions, creating investment opportunities in emerging markets or alternative asset classes, and leveraging opportunities that large institutions may overlook due to their scale. We maintain a broad view of markets, new technologies, and global opportunities, balancing these with a long-term perspective on risk management. Our expertise in legal and tax strategies enables us to navigate even the most complex situations.
For example, we work with a number of early bitcoiners who understand the trajectory of this new asset class. Working with and prioritizing an allocation to bitcoin while it’s experiencing its monetization phase is incredibly important when considering asset allocation. We’re able to step back and understand the opportunity cost of premature portfolio rebalancing in this environment.
Flexibility and Iteration
Wealth management is a dynamic process. Everything in life is subject to change, often in ways we can’t control. Markets shift, regulations change, and family circumstances evolve. We believe wealth planning is an iterative process that requires ongoing dialogue. Our strategies are designed to be flexible, allowing us to make adjustments as family requirements change.
This level of adaptability is often harder to achieve with larger institutions, where processes are more rigid and transactional. Smaller PWMs and MFOs excel in maintaining this level of flexibility, allowing them to better serve clients in an ever-changing environment.
The most important thing to consider with estate planning is that every individual and family has unique needs and deserves a thoughtful well-designed wealth management strategy. Smaller PMWs and MFOs have proven time and again that they can provide an equal level of services that are often more personalized and customizable.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.
The following information is intended for general educational purposes only and should not be construed as legal or investment advice.
