What is the Corporate Transparency Act?

On September 29, 2022, the US Treasury Department Financial Crimes Enforcement Network, “FinCEN”, issued its final rule implementing requirements to report beneficial ownership information from certain entities under the Corporate Transparency Act.  The goal of this legislation is to fight the financing of terrorism and money laundering.  The rule takes effect on January 1, 2024.  Any “reporting company” existing or registered before then must file an initial report by January 1, 2025.  Any reporting company created or registered after January 1, 2024 must file its initial report within 30 days after creation or registration. 

What is to be reported? FinCEN is in the process of creating forms for this and will publish such in the Federal Register.  Failure to comply with the reporting requirements can lead to civil and criminal penalties including a maximum civil penalty of $500 per day, up to $10,000, and imprisonment for up to two years.

Who must report? Domestic companies including smaller corporations, limited liability companies, limited liability partnerships, limited liability limited partnerships, business trusts (statutory trusts or Massachusetts business trusts) and limited partnerships.  For example, if you have an LLC that owns a rental property, the LLC is a reporting company.  Foreign companies operating in the USA under the law of a foreign country and registered to do business in any state or tribal jurisdiction, or any entity created by filing a document with a secretary of state or similar state or tribal office, are also included.  

There are 23 categories of entities exempt from reporting.  It appears that most estate planning trusts will not have to report to FinCEN.  To be a reporting company the trust would have to file a registration document with a secretary of state or similar state or tribal office; most revocable and irrevocable trusts do not do this.  Charitable trusts are specifically exempt from reporting.

Even though most trusts will not qualify as reporting companies, the law impacts any entity with an ownership interest in a U.S. company, including foreign trusts.  Reporting companies must report to FinCEN each owner that owns more than 25% of the company, including trusts, regardless of where the trust is domiciled and whether it is registered with any secretary of state. 

Lawyers as Notaries – Arizona Law

Lawyers are authorized to perform notarial acts pursuant to A.R.S. §41-258(A)(3).  A more accurate definition would be lawyers are notarial officers.  A Notary Public is a person commissioned by the Secretary of State.  

Who is a “notarial officer?”  A notary public or other individual authorized to perform a notarial act. See A.R.S. 41-251

Pursuant to law, the recorder’s office may only reject a filing for recording if it fails to

meet the basic standards. Nothing allows rejection for notarial acts.

What about the courts?  Questions of the validity of a document are questions for opposing counsel.  If documents comply with the rules of practice, a clerk of the court cannot reject a document. The clerk may need to be reminded of the statute if documents are rejected.

How does an attorney have a notarial act recognized in other states?  Put a statutory reference in your notarial block thus reducing the likelihood that the documents will be rejected.  Most states follow the doctrine of reciprocity.  It might be helpful to include a copy of the statute with documents that will be recorded or sent to entities or offices in other states.

A sample notarial block might include the following:


Attorney at Law

Licensed to Practice Law in Arizona

State Bar Number

Authorized to Perform Notarial Acts

Pursuant to A.R.S. §41-258(A)(3)

Just as notaries are required to keep a journal of notarial acts, the lawyer should, too.  

What is the Corporate Transparency Act?

The Corporate Transparency Act is a federal law aimed at preventing money laundering that passed in 2021 and becomes effective January 1, 2024.  The penalties for failure to comply with the requirements potentially include a felony conviction, a $500 daily penalty up to $10,000, and up to two years of prison. Needless to say, compliance – if applicable – with the new reporting requirements is essential. 

Domestic corporations, LLCs and LLPs are “reporting companies” if created by filing with the secretary of state or tribal jurisdiction.  Foreign reporting companies are formed under the law of a foreign country and registered to do business in a state or tribal jurisdiction by a similar filing.  Sole-proprietorships that don’t use a single-member LLC are not considered a reporting company.

Many small business owners will be required to file a beneficial owner report for their companies’ LLC or corporation with FinCEN (the Department of the Treasury’s Financial Crimes Enforcement Network). FinCEN will keep the information gathered from these reports in a database for authorized government authorities and financial institutions to prevent money laundering. The database will not be viewable by the public. 

Who Is Required to File?

This requirement applies to all reporting companies, with some exceptions for large publicly-traded companies and businesses that meet all of the following criteria: 1) has more than 20 employees; 2) grosses more than $5 million annually; and 3) maintains a physical presence at a business office in the United States.

If your business is an LLC or corporation, including a single-member LLC, you are required to fill out this form by the end of 2024. If you create a new LLC or corporation in 2024, you must complete the report within 30 days of forming the new LLC or corporation. Any changes to beneficial ownership, name, or address must also be reported within 30 days. However, there is no annual reporting requirement. 

What Information is Required for Filing?

  • Its legal name and any trade name or dba;
  • Its address;
  • The jurisdiction in which it was formed; and
  • Its taxpayer identification number.

In addition, the following information will be required for each company’s beneficial owner:

  • Legal name;
  • Date of birth;
  • Address; and
  • An identifying number from a driver’s license, passport or other government-approved document for each individual, as well as an image of the document that the number is from.

A Primer on Estate Taxes – Federal and State

What is Subject to Estate Taxes?

All the assets of a deceased person that are worth $12.06 million or more in 2022 are subject to federal estate taxes. That amount increases to $12.92 million in tax year 2023 and is then taxed at a rate of 18% to 40%.  Typical deductions from the gross value of the estate to determine if it is under the exemption amount include funeral and burial expenses, estate administration expenses (court fees, accountants, attorneys, expenses in collecting assets, paying debts, and distributing assets), charitable donations, and payment of state estate or inheritance taxes.

An estate tax is levied on the estate itself and an inheritance tax is levied against those who receive an inheritance from an estate.

State Estate Taxes 

An estate tax is assessed by the state in which the decedent (person who passed away) was living at the time of death. If a person lives in a state that has an estate tax, the exemptions for state and district estate taxes are all less than halfthose of the federal assessment. Following are the jurisdictions that have estate taxes: 

Connecticut, District of Columbia, Hawaii, Illinois, Maine, Massachusetts, Maryland, New York, Oregon, Minnesota, Rhode Island, Vermont, and Washington state.

The tax rate is calculated on a sliding basis, typically 10% or so for amounts just over the threshold, and it rises in steps, usually to 16%. The top estate tax rate is lowest in Connecticut, at 12%, and highest in Washington State, where it tops out at 20%.

State Inheritance Taxes 

Inheritance tax is assessed by the state in which the inheritor is living.  Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania all have these taxes.  Whether an inheritance will be taxed and at what rate depends on its value, the relationship to the person who passed away, and the prevailing rules and rates where the inheritor lives.

As with estate tax, an inheritance tax is applied only to the sum that exceeds the exemption.  Tax is assessed on a sliding basis above those thresholds. Rates typically begin in the single digits and rise to between 15% and 18%. Both the exemption amount and the rate charged may vary by the person’s relationship to the decedent—more so than with the value of assets inherited. Generally, the closer the person is to the decedent, the lower the rate paid. Surviving spouses are exempt from inheritance tax in all six states. Domestic partners, too, are exempt in New Jersey. Descendants pay no inheritance tax except in Nebraska and Pennsylvania.  

Other Benefits

Some states offer reductions in taxes for widows or widowers. For example, in Florida a surviving spouse is entitled to receive a reduction in the taxable value of a property they own by $500 each year, in perpetuity, or until they remarry.

What is Generation Skipping Tax?

Generation skipping tax (GST) is a federal tax aimed at preventing someone from skipping over their children in their Estate Plan. The picture is of an affluent grantor arranging to leave assets to younger generations to avoid estate tax. It is triggered if there is an inheritance left to a beneficiary who is 37 ½ or more years younger than the grantor who is leaving the assets. 

The tax was implemented in the mid-1970’s and was introduced to close the loophole that once allowed inheritances to skip a generation solely for the purpose of avoiding certain taxes. GST ensures that assets placed in a trust are taxed. The beneficiary receives any amount over the tax credit. Leaving money to your children is not considered “generation skipping.” Likewise, if a child has passed away and leaves money to their child, that also does not result in “generation skipping.” 

GST is different from the traditional estate tax – it’s in addition to it. GST can be a direct or an indirect skip. A direct skip is subject to gift or estate taxes. An example is a grandfather leaving property to a granddaughter. The transferor pays the taxes for this type of skip.  An indirect skip has intermediate steps. In one type of indirect skip, called a taxable termination, there’s a skip person and a non-skip person. The primary beneficiary acts as the non-skip person and the skip person will receive the assets upon the death of the primary beneficiary. Taxes on an indirect skip are due when the estate passes to the skip person.

GST taxes are currently 40 percent. The GST tax exemption for individuals is $12.9 million, double for married couples, in 2023.  Only the value in excess of this exemption is subject to the 40 percent tax. Most people don’t have to worry about the GST because of the high threshold that is adjusted every year for inflation. Remember, the tax only applies to inheritance in excess of the exemption. 

Overview of Estate Taxes in 2023

At death, a person’s assets could be subject to estate taxes and inheritance taxes depending on where they lived and how much they were worth.  Frankly, most estates are too small to be charged a federal estate tax.  In 2023, the exemption amount is $12.92 million.  But, in 2025 the amount is set to go to $5 million, adjusted for inflation, unless Congress acts.  As for states, most do not have an estate tax – levied on the estate — nor an inheritance tax, assessed against the recipient of an inheritance by the state where the recipient lives.  Surviving spouses are generally exempt from these taxes, regardless of the value of the estate or inheritance.

The IRS requires estates with combined gross assets and prior taxable gifts exceeding $12.92 million for 2023 to file a federal estate tax return and pay the relevant estate tax. The portion of the estate that’s above this $12.92 million limit in 2023 will ostensibly be taxed at the top federal statutory estate tax rate of 40%. In practice, various discounts, deductions, and loopholes allow skilled professionals to pare the effective rate to well below that level.  

Anything in the estate that is distributed to a surviving spouse is not counted in the total amount and is not subject to estate tax.  The right of spouses to leave any amount to one another is called the unlimited marital deduction.  But, when the surviving spouse who inherited the estate dies, the beneficiaries may then owe estate taxes if the estate exceeds the exclusion limit. Other deductions, including charitable donations or any debts or fees that come with the estate, are also excluded from the estate amount calculation.

An heir due to receive money or assets can choose to reject the inheritance by disclaiming it or signing a waiver declining the inheritance.  The executor of the Will would then name a new beneficiary of the inheritance.  An heir might choose to waive an inheritance to avoid paying taxes or having to maintain a house or other structure. A person in a bankruptcy proceeding might want a disclaimer so that the property can’t be seized by creditors. 

Connecticut, Hawaii, Illinois, Maine, Massachusetts, Maryland, New York, Oregon, Minnesota, Rhode Island, Vermont, Washington State and the District of Columbia collect estate taxes.  Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania collect inheritance taxes.  As with federal estate tax, these state taxes are collected only above certain thresholds. And even at or above those levels, the person’s relationship to the person who died may avoid some or all taxes. Again, surviving spouses and descendants of the deceased rarely, if ever, pay this levy.

Is An Arizona Beneficiary Deed Right For You?

Arizona is one of the states that authorizes a Beneficiary Deed to convey property at death.  The law is found at Arizona Revised Statutes, Section 33-405.  How does it work?  Essentially, the deed allows the grantors, after all grantors are deceased, to convey title to real property in Arizona to named beneficiaries without having to go through a Will or Trust.  The process is completed at the county’s recorder office, not a probate court or by a successor trustee of a trust. Any beneficiary deed must be recorded in the county of the location of the real property to be effective.  

The definition by statute is: “A deed that conveys an interest in real property, including any debt secured by a lien on real property, to a grantee beneficiary designated by the owner and that expressly states that the deed is effective on the death of the owner transfers the interest to the designated grantee beneficiary effective on the death of the owner subject to all conveyances, assignments, contracts, mortgages, deeds of trust, liens, security pledges and other encumbrances made by the owner or to which the owner was subject during the owner’s lifetime.”

If the title to real property includes the right of survivorship, the deed must state that it becomes effective to convey title upon the death of the last survivor. A beneficiary deed may be used to transfer an interest in real property to the trustee of a trust — even if the trust is revocable.  

The statute states that a beneficiary deed may designate multiple grantees who take title as joint tenants with right of survivorship, tenants in common, a husband and wife as community property or as community property with right of survivorship, or any other tenancy that is valid under the laws of this state.  Unless the beneficiary deed provides otherwise, the interest in real property conveyed by a beneficiary deed is the separate property of the named grantee beneficiary and is not community property.  Moreover, a beneficiary deed may designate a successor grantee beneficiary and express the condition that must occur to allow the successor grantee to take title.

A beneficiary deed may be revoked at any time by the owner or, if there is more than one owner, by any of the owners who executed the beneficiary deed.  The revocation must be recorded to be effective.


1.         What Is It?

An Inheritance Protection Trust is an irrevocable trust created by a deceased person’s estate plan. Usually, the trust is for one of the decedent’s children and is for a responsible and healthy adult beneficiary — not someone in need of a Special Needs Trust. It continues for the life of the beneficiary.

2.         Who Is The Trustee?

The beneficiary may also serve as the trustee or has the right to name another, independent, trustee. Consequently, an Inheritance Protection Trust is also referred to as a beneficiary-controlled trust.

3.         What Are The Benefits?

a.         Estate Tax Protection. The trust assets may be exempt from federal estate tax upon the death of the beneficiary. When calculated in the taxable estate of the deceased beneficiary, trust assets would not be counted.

b.         Creditor protection. Trust assets are protected from creditors of the beneficiary (remember, this is an irrevocable trust with its own Tax Identification Number.)  There are different levels of protection depending on how the trust is drafted. 

c.         Divorce.  Trust assets are the separate property of the beneficiary and may not be converted to community property during the marriage. Thus, an ex-spouse cannot penetrate the trust should the beneficiary’s marriage end in dissolution. 

d.         Family Protection. The trust may ensure family assets pass to the next generation rather than to surviving spouses who may remarry. Thus, assets may bypass spouses and pass to grandchildren.

4.         What Are The Steps For An Asset Protection Trust?

The trust is drafted into a will by the testator/testatrix (person who makes a will) or revocable trust by the grantor (person who makes a trust) in his or her lifetime.  The trust is then funded with assets at the death of the testator/testatrix or grantor.  If a trust is created during the life of the testator/testatrix or grantor, it requires an irrevocable gift and loss of control over the gifted assets.

The trust itself requires appointing a trustee, preparing a Certification of Trust, applying for a Tax Identification Number, and opening a financial account in the name of the trust.

5.         What Is The Cost To Include This Trust In A Will or Revocable Trust?

A typical cost would be an additional $1,500 to $2,000 to include an Asset Protection Trust in a will or revocable trust.


New federal legislation has been enacted in connection with retirement plans beginning in 2023.  Here are highlights from this law, dubbed SECURE ACT 2.0: 

1.         Raising the Required Minimum Distribution (RMD) age to 73

Savers were required to begin taking RMDs at age 72.  (An RMD is the amount of money that must be withdrawn from an employer-sponsored retirement plan, traditional IRA, SEP, or SIMPLE IRA, by owners to avoid tax consequences.) The withdrawal amount is calculated by factors such as account value and longevity. The new law raises the RMD starting age to 73 in 2023 and to 75 in 2033. 

If you turn 73 this year you must take a distribution no later than April 1, 2024. The distribution for subsequent years would need to be made by Dec. 31 of that year.  Those who start withdrawing in 2024 would need to take two distributions — one for 2023 and one for 2024.

2.         Eliminating RMDs from a Roth 401(k)

Beginning in 2024, those with Roth 401(k) accounts will no longer have to take RMDs.  This change aligns Roth 401(k)s with Roth IRAs, which don’t require distributions during one’s lifetime.

3.         Reducing RMD tax penalties

The IRS assesses a tax penalty on account owners who fail to withdraw the full amount of their RMD or who fail to take any distribution whatsoever by the annual deadline.  The new law reduces the tax penalty to 25% — from 50% — on the RMD amount that wasn’t withdrawn.  If a taxpayer corrects the mistake in a timely fashion, the penalty is reduced to 10%.  The IRS can waive penalties if savers can demonstrate the shortfall was “due to reasonable error and that reasonable steps are being taken” to remedy it.

4.         Emergency withdrawals

Beginning in 2024, savers can make 1 withdrawal of up to $1,000 a year from an IRA or 401(k) for personal or family emergency expenses and the IRS will waive the 10% tax penalty. Savers  can self-certify the need for the funds and employers can rely on an employee to self-certify an event of hardship or unforeseeable emergency to make such a withdrawal. 

5.         SIMPLE IRAs and SEPs accept Roth contributions

In 2023, SIMPLE IRAs can accept Roth contributions, and employers can offer employees the ability to treat employee and employer SEP contributions as a Roth, either in whole or in part.

New Law in Arizona – 2023

With a new year comes new laws and regulations in states and cities across the country. Nearly half of all U.S. states will increase their minimum wages in 2023, including Arizona.  The new minimum wage will increase from $12.80 per hour to $13.85.  Flagstaff’s minimum wage will be $16.80 per hour.

A new Arizona law on sealing criminal records may help some renters, but there are limitations. This law is the third effort by Arizona to give people with criminal records a second chance.  Arizonans with criminal backgrounds now have an opportunity to shield their records from public view, which can help benefit public housing assistance.

As part of the Inflation Reduction Act, the price of insulin for Medicare beneficiaries will be capped at $35 per month. 

Changes to the tax credits for those purchasing used electric vehicles means buyers can receive up to $4,000 in credits but it may not exceed 30% of the vehicle’s sale price. According to the IRS, you may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.

In the realm of health care, the power of attorney appointing a party to act as your agent comes with a new wrinkle.  Your agent will be subject to visitation/contact law found at A.R.S. § 36-3211, wherein contacts between you as the principal and those with whom you have a significant relationship are encouraged and allowed, and your agent cannot limit, restrict or prohibit reasonable contact between you and any other person without prior court approval. 

What is the reason for this?  Notorious cases such as that of Casey Kasem – where the party (wife) denied family members (children from another marriage) contact or visiting with Casey resulting in litigation.  However, the power of attorney form may provide that you, as the principal, may grant to your agent the power to limit contacts or visits between you and others, if you wish.