As discussed in a prior newsletter, the Corporate Transparency Act (CTA) was enacted as part of the Defense Reauthorization Act in late 2021 to help prevent and combat money laundering, terrorist financing, tax fraud, corruption and other criminal activity. The new reporting system is still scheduled to launch on January 1, 2024. The main goal of the CTA is to look through entity ownership structures to report the individual people who are the beneficial owners of each reporting company.

For some small businesses, determining the identity of the beneficial owners will be straightforward. For example, if the entity is a single member limited liability company that has one natural person as the 100% owner and that member controls the activities of the company, the report will be straightforward. For other small businesses, such as those that have multiple owners, are wholly- or partially-owned subsidiaries of another entity, or have complex control structures, determining the identity of the beneficial owners will be much more complicated. 

In determining the beneficial ownership of each reporting company, the CTA and its regulations set forth rules to determine both who “owns or controls” the equity in the company and who exercises “substantial control” over the company. Both groups qualify as beneficial owners. Reporting companies may need assistance to determine who qualifies as “beneficial owners” for purposes of the CTA.

Once the identity of the beneficial owners is determined, reporting companies will need to collect the personal identifying information about each individual beneficial owner of the company in order to file the required report. That information includes each beneficial owner’s: legal name, birth date, current street address, a unique identifying number from a government document (such as a driver’s license or passport), and a legible copy of that identifying document.

As an alternative, individuals may apply for a FinCEN identifier by providing the same information in an online application. Once a FinCEN identifier is issued, individuals may provide their FinCEN identifier in lieu of providing their personally identifying information. The FinCEN identifier will be included in the reporting company’s report instead. The application for FinCEN identifiers is anticipated to launch on January 1, 2024 with the entire reporting system.

Getting the reporting right is important: the CTA includes substantial penalties for both failing to file and for willfully providing false or fraudulent beneficial owner information. These penalties include fines of $500 per day that a report is outstanding up to a maximum fine of $10,000 and sentences of up to two years in prison.

With the reporting requirements coming closer, now is the time for reporting companies to identify their beneficial owners and reach out to them. If you or your company need assistance in determining whether your company is a reporting company and who your beneficial owners are, we can help. Please reach out to Kathryn E. Diehm for guidance.

Kathryn E. Diehm is a business attorney with Rucci Law Group, LLC. She has experience with all areas of business law. Kate can be reached at 203-202-9686 or at kdiehm@ruccilawgroup.com.

The Darien Blight Review Board (BRB) has been chaired by RLG attorney George Reilly for the last two years.

The mission of the BRB is to ensure that identified properties do not attract trespassers or devalue Darien neighborhoods. The BRB is also tasked with being fair and considerate to property owners.

The BRB was created pursuant to a Town ordinance in 2016 and is made up of five members who each serve a two-year renewable term. The BRB meets each month except in August and is actively engaged in seeking remediation of blight conditions on about a dozen residential properties.

When the BRB meets, it is to “define, regulate, prohibit and abate housing blight in order to protect, preserve and promote public health, safety and welfare; and to maintain and preserve the beauty of neighborhoods and the general appearance of the Town.” Blight is found on a property that is and continues to be “in a state of disrepair or is becoming dilapidated.”

Typical blight conditions include: missing, broken windows or doors; collapsing walls or roof; seriously damaged, missing or loose siding, gutters, shingles or roofing; unrepaired fire or water damage; persistent and excessive amounts of garbage, trash or construction debris; inoperative or unregistered vehicles or mechanical equipment parked, kept or stored on premises; vacant buildings left unsecured; overgrown brush, grass or weeds covering a significant portion of the front yard; structures significantly covered with invasive non-ornamental weeds and/or vines; overrun by rodents. The board has jurisdiction over residential or commercial property with two or more such conditions.

A careful process is employed by the board to work with property owners and remediate blight concerns.  The process starts with a complaint being filed with the Town’s Blight Prevention Officer Henry Ference (hference@darienct.gov) or using the Q Alert system on the Town’s website (www.darienct.gov) concerning a commercial or residential property.

Once a complaint is filed, the Blight Prevention Officer makes an initial inspection from the street and will contact the complainant (who can remain anonymous) and property owner. If the officer determines the condition does constitute blight and the property owner is not advancing toward resolution of the condition, the officer will advise the BRB accordingly. If the BRB agrees there are concerns about the condition of the property, the board will set a date for it to make a determination about whether the condition does indeed constitute blight, and the property owner will be invited to participate in that meeting.

If the BRB does find blight, it will provide a period of time for the property owner to remedy the condition. If the condition is not remedied in that period of time, fines will begin to accrue. Fines are typically $100 per day.

The Blight Prevention ordinance gives the board the ability to consider specific considerations for individual property owners and residents who may be disabled, elderly, or low-income. It is the BRB’s practice to be discreet about revealing addresses and names of property owners when discussing properties during meetings, although that information is publicly available. To encourage efficient clean-up, the Town often offers resources to assist in the remediation of blight conditions including dumpsters and workers to assist in the removal of overgrown landscaping and other tasks.

Each member of the BRB also is a representative of an additional Town agency. Attorney Reilly also serves as the Vice-Chair of the Planning and Zoning Commission.

George Reilly has been practicing matrimonial law in Fairfield County for more than thirty-five years. For more information, please contact him at 203-202-9686 x254.

Frequently parents, grandparents, friends, and other relatives will want to set aside funds for a minor child. Here are a few of the most popular options and some pros and cons of each one. This list is not meant to be exhaustive but to highlight some of the most important features of the options presented.

Uniform Transfers to Minors Act (UTMA) Accounts

These accounts are simple to set up and can be established at a wide variety of financial institutions. It is important to note that the donor is making an irrevocable gift to the minor.   The property belongs to the minor at the time the gift is made. The account uses the minor’s social security number, and a parent or other adult serves as the custodian.

Pros:

• A UTMA account is simple and inexpensive to establish.
• Assets can be given to a minor without the need for a trustee.
• Assets can be gifted to a minor up to the annual exclusion amount ($17,000 In 2023) without having to file a gift tax return.
• Income earned within the account is taxed at the kiddie tax rate by the IRS up to the allotted threshold of $2,200. Earnings above that amount are taxed at the adult donor’s marginal tax rate.

Cons:

• The gift is irrevocable and must be surrendered to the minor when he or she reaches 21 years of age.
• If the donor dies while serving as custodian, the assets in the UTMA are counted as part of the donor’s taxable estate until the minor takes possession.
• Because the property is owned by the minor, this may make the minor less eligible for need-based college scholarships and other similar programs.

Trusts for the Benefit of a Minor Child

Establishing a trust for a minor child allows the donor the greatest degree of flexibility and control over how the trust funds can be used, what the distribution criteria will be, and when the minor child has the right to receive funds directly. Trusts can be very personalized based on the donor’s wishes. Trusts also provide creditor protection until the time the beneficiary has the right of withdrawal.

Pros:

• A trust can be customized.
• There is no requirement to surrender funds to the minor at age 21.
• Assets can be gifted to a minor up to the annual exclusion amount ($17,000 In 2023) without having to file a gift tax return. Assets can be gifted to the minor up to the donor’s lifetime exclusion amount if the donor is trying to transfer assets out of the donor’s estate for estate tax planning purposes. The transfer is irrevocable at the time it is made and would not come back into the donor’s estate.
• Assets are not owned by the minor.

Cons:

• A trust is more expensive to set up, but once established operates similarly to a UTMA with the trustee acting as the custodian.
• Income earned and retained by the trust will be subject to trust tax rates, which are higher than the marginal tax rates for individuals with lower incomes. However, trusts can be structured with the donor being responsible for paying the income taxes, thereby preserving a greater portion of the income for the beneficiary and contributing to the transfer of wealth in a way that is not subject to gift taxes.

529 Savings Plans

These are tax-advantaged savings accounts that are designed to be used toward the minor’s education costs. Income or gain earned within the account is not taxed and can be withdrawn tax-free if it is used for education expenses, such as tuition or room and board.

Pros:

• Earnings can grow free from federal tax and are not taxed when the money is withdrawn to pay for certain college and other qualified education expenses.
• 529 Plans have relatively high maximum aggregate limits.
• Donors can front-load contributions of annual exclusion amount gifts ($17,000 in 2023) for up to five years at once ($85,000 in 2023), as long as one doesn’t make any additional contributions for that beneficiary for five years.
• The account owner controls the account and can withdraw the funds for any reason, subject to income tax and a 10% penalty tax.

Cons:

• Account owners must choose a specific plan with set investment choices. There is a wide variety of plans and choices, but some feel that the investment options are limited.
• Unlike UTMA accounts and trusts, there is no option for self-directed investments.
• The funds must be used for education. If the minor does not attend college, the beneficiary can be changed to another qualifying family member or to the account owner to further his or her own education. If the funds cannot be used for education, the account owner can withdraw the funds and would have to pay tax on the income earned and the 10% penalty tax.

Saving for a minor child is a wonderful gift that can take many forms or can be a combination of different options depending upon a family’s needs and estate planning considerations.

Please let us know if you have any questions as you consider what savings options may be best for you.

Michele D. Gartland is a partner of Rucci Law Group, LLC. She practices primarily in the areas of trusts and estates. Michele can be reached at 203-202-9686 or at mgartland@ruccilawgroup.com.

When he passed away in June, John W. Hetherington left behind an impressive legacy, remembered for his work as a lawyer and state politician but also as a devoted husband, father and friend.

Hetherington’s legal career included a significant class-action settlement against CNA Insurance that took years to litigate. CNA was alleged to have changed the long-term care policies of as many as 400 Connecticut residents so they were denied coverage for previously covered stays in assisted-living communities. The insurance company was also accused of hiking the premiums of the same clients by as much as 30 percent during the same period.

Hetherington’s work on that case highlighted his commitment to the law, says Joseph J. Rucci, Jr., senior counsel at Rucci Law Group.

“What a privilege it was to work with John. He was the best kind of lawyer: a man of integrity and honor who brought scholarship and humanity to the law,” said Rucci. “Clients and colleagues alike appreciated his professionalism and thoroughness while enjoying his dry sense of humor. In addition to his legal excellence, his was a life of service to his community, the State of Connecticut and the U.S. Navy. John was a devoted family man and a favorite friend and leaves a lasting legacy to all he touched.”

Connecticut politics were graced by Hetherington’s thoughtful presence and calm demeanor starting in 2003 when he was elected to represent the 125th Assembly District (New Canaan and the western portion of Wilton). He served in the State Assembly as the ranking member of the Judiciary Committee until 2013 when he decided not to seek re-election. Hetherington’s tenure as a State Representative was remembered with fondness by colleagues on both sides of the aisle – a testament to his integrity and dedication to serving his community.

Amy Zabetakis, Managing Partner at Rucci Law Group, said Hetherington was devoted to the law and public service.

“I am immensely grateful that I had the opportunity to know and work with John,” she said. “He was a kind man and there could be no doubt of his devotion to public service. We will miss his wonderful sense of humor and seeing his seemingly endless array of bow ties.”

For all his professional accomplishments, his greatest source of pride and joy was his family. He is survived by his wife of almost 47 years, Hope, his two children, Kells and Jane, their spouses, Alison Hetherington and Greg Loop, and two granddaughters, Charlie Loop and Lydia Hetherington. The Hetherington family will forever remain friends of the firm and we are grateful to have had John as a colleague and friend.

The Corporate Transparency Act (CTA) was enacted as part of the Defense Reauthorization Act in late 2021. The CTA’s purpose is to help prevent and combat money laundering, terrorist financing, tax fraud, corruption and other criminal activity. The CTA intends to meet these goals by creating a reporting system with the Financial Crimes Enforcement Network (FinCEN). Final rules have been adopted and the new reporting system is scheduled to launch on January 1, 2024.

If you own a small business, you may fall under the new reporting requirements. For purposes of the CTA, a “reporting company” is defined as: (1) a corporation; (2) a limited liability company; or (3) any entity that is created by the filing of a document with a secretary or state (including limited partnerships and limited liability partnerships). There are many exceptions to this general definition depending on certain factors, including the size of the business and whether it is already regulated.

Each reporting company will need to file a report listing certain information about both the company itself and personal identifying information about each individual beneficial owner of the company. Beneficial owners include any individual who, directly or indirectly, exercises substantial control over the reporting company or who owns or controls at least 25 percent of the ownership interests in the company. Depending on the ownership structure of your business, determining the identity of the beneficial owners may be a challenge!

Businesses in existence prior to January 1, 2024 (when the new reporting system is scheduled to launch) have until December 31, 2024 to file their initial reports. New businesses (those formed after January 1, 2024) will need to file their initial reports within 30 days of their creation. FinCEN estimates that more than 32 million initial reports will be filed in 2024.

What should you do to prepare? First, determine whether your business will be considered a “reporting company” for the CTA. If so, then you should start determining the identity of your beneficial owners and reach out to them to discuss these new reporting requirements.

If you need assistance with reviewing the regulations and determining your obligations, we are here to help.

Kathryn Diehm is a business attorney with Rucci Law Group, LLC. She has experience with all areas of business law. Kate can be reached at 203-202-9686 or at kdiehm@ruccilawgroup.com.

Today, so much of our lives are online. We have social media accounts, document storage, banking and daily communication across multiple devices. Almost all of us have an active digital footprint. Digital Assets generally include any electronic record in which you have a right or interest, including any asset or liability which is itself an electronic record, regardless of the ownership of the device or account used to create such electronic record. A Digital Account includes all arrangements under which a custodian carries, maintains, processes, receives or stores a Digital Asset or provides goods or services in which you have an interest, or which you are lawfully entitled to use, also regardless of the ownership of any device on which the Digital Account is accessed or stored.

Bank statements and bills; paid online or free subscriptions and accounts with companies like iTunes, Amazon, LinkedIn, Twitter or Instagram; digital currencies, such as Bitcoin; blogs or a domain you might own; as well as cloud-based photo storage; voicemail messages; reward programs and credit card points; all count as Digital Assets. If something were to happen to you, who would know what accounts you have and would they be able to access them online? Some of these accounts might have significant monetary or sentimental value.

Under Connecticut law, you can appoint a fiduciary to access your Digital Assets if you pass away or become incapacitated. This explicit authorization is critical to enable the fiduciary to obtain access to your Digital Assets. It is essential to include such powers in your Last Will and Testament or Trust and in your Power of Attorney to ensure that your fiduciary will have access to your online information and accounts. It is important to review your estate plan to ensure that not only are your financial and real and personal property provided for, but also your digital assets are considered and can be properly managed by your fiduciary. Access to your digital assets and your specific wishes as to how they will be handled after your death are just as  crucial as access to your physical and financial assets. To make sure your fiduciary is aware of and has access to your accounts, we recommend:

1. Compiling an inventory of all online accounts and assets. This list should be kept together with your estate planning documents. Be sure to include your username and password and any other necessary information for all accounts, including social media accounts, your Cloud account, and online banking accounts. This list should be updated each time your passwords change.
2. Providing Instructions for Digital Assets. Let your fiduciary know how you would like your digital assets handled at death. For example, would you like photographs from your Facebook, Instagram or Cloud account passed to your loved ones? Would you like your social media footprint to be eliminated completely? This is important guidance to your fiduciary so he or she is aware of your wishes.
3. Updating your estate plan documents, as needed. Make sure your estate plan documents specifically include access to your digital assets. You may personalize your plan to name a specific individual to be your agent for Digital Assets, who may or may not be the same person you choose as your executor, or you may decide to limit access to certain Digital Assets.

As with every aspect of your estate planning, the goal is to be prepared and to make sure your wishes are followed. Providing access and instructions to your fiduciary and a list of accounts your fiduciary should be aware of are key steps in making sure there is access to important information and the value of your Digital Assets are preserved.

Michele D. Gartland is a partner of Rucci Law Group, LLC. She practices primarily in the areas of trusts and estates. Michele can be reached at 203-202-9686 or at mgartland@ruccilawgroup.com.