Beneficial Ownership Through Trusts: Roles, Thresholds, Reporting

Under the Corporate Transparency Act’s beneficial ownership rules, a trust that holds an interest in a reporting company can produce several reportable individuals at once. Trustees, grantors or settlors, certain beneficiaries, and other people the trust document empowers to move its assets can each independently qualify as a beneficial owner, depending on the trust’s terms. Beneficial ownership through trusts is analyzed role by role, and a single trust often generates more than one reportable person.

One threshold point before the roles: after FinCEN’s March 26, 2025 interim final rule, the reporting obligation now applies only to entities formed under foreign law that have registered to do business in a U.S. state or tribal jurisdiction. Entities created in the United States are exempt, and U.S. persons who are beneficial owners of a foreign reporting company are not reported either.¹² The trust framework below still governs those foreign reporting companies today, and FinCEN has said further rulemaking is coming, so the analysis matters for anyone setting up or administering trusts that hold company interests.

When a Trustee Counts as a Beneficial Owner

A trustee qualifies in two independent ways under 31 C.F.R. § 1010.380.

The first is asset-disposition authority. A trustee with power to sell, transfer, or encumber a company interest held in trust is treated as owning or controlling that interest, and becomes a beneficial owner when the trust holds at least 25% of the reporting company.³

The second is substantial control, and it operates regardless of the trust’s ownership percentage. Someone exercises substantial control if they direct important company decisions, have authority over hiring or removing senior officers, or can appoint or remove a majority of the board. The list of qualifying decisions is broad: approving major expenditures, entering significant contracts, dissolving or merging the company, and setting senior officer compensation, among others. A trustee who directs even one such category on behalf of a trust is a beneficial owner even if the trust owns less than 25%.³ The regulation names trustees as one channel through which substantial control can be exercised indirectly.⁴

Fiduciary duty is not an escape. A trustee bound to act in the beneficiaries’ interests still holds the legal power to make the decisions, and that power is what triggers the rule.

Corporate and Institutional Trustees

Because reported beneficial owners must be individual people, a corporate trustee cannot itself be named. The reporting company must instead determine whether any individuals at the corporate trustee indirectly own or control at least 25% of the reporting company through their stake in the trustee entity, or independently exercise substantial control over the reporting company.⁵

A narrow shortcut allows the reporting company to list the corporate trustee’s name in place of individual information, but only if all three conditions are met: the corporate trustee qualifies for one of the 23 CTA entity exemptions, the individual’s beneficial ownership stems solely from their interest in the corporate trustee, and that individual does not exercise substantial control over the reporting company.⁵ Any individual at the corporate trustee who independently directs company decisions must be reported by name.

When a Grantor or Settlor Counts

The person who created and funded the trust is a beneficial owner if they retained the right to revoke the trust or withdraw its assets, provided the trust holds at least 25% of the reporting company.⁴ Someone who can unwind the trust and take back the company interest effectively owns it.

This mostly matters for revocable trusts, where the grantor typically keeps full power to amend, revoke, or reclaim assets. In an irrevocable trust the grantor has generally surrendered that control. Some irrevocable trusts still give the grantor limited powers, such as a swap power used for tax planning, and whether a particular retained power amounts to the ability to withdraw trust assets depends on the trust’s terms. The trust agreement is the controlling document.

A grantor without withdrawal rights can still qualify through the substantial control pathway if they retain influence over company decisions made through the trust. Ownership interest and substantial control are separate tests.

When a Beneficiary Counts

Not every beneficiary is reportable. The regulation identifies two situations.

A beneficiary is treated as owning the trust’s interest in the reporting company if they are the sole permissible recipient of both income and principal.⁴ Both parts matter. If the trust can distribute income to one person and principal to another, neither is a sole permissible recipient of both.

A beneficiary also qualifies if they hold the right to demand distribution of, or withdraw, substantially all of the trust’s assets.⁴ Receiving discretionary distributions at a trustee’s judgment is not the same thing. The beneficiary needs an enforceable right to pull the assets out.

A beneficiary with only a future or contingent interest — someone who inherits only after another beneficiary dies, for example — generally meets neither test. FinCEN’s guidance notes that trust arrangements vary and the facts determine the outcome, and that the regulatory list is not exhaustive, so unusual trust structures can produce beneficial owners through other pathways.⁵

Trust Protectors and Other People With Authority Over Trust Assets

The regulation reaches beyond the three familiar roles. It covers any “trustee of the trust or other individual (if any) with the authority to dispose of trust assets.”⁴ That “other individual” language sweeps in trust protectors, directing parties, investment advisors, and anyone else the trust document empowers to sell, transfer, or otherwise dispose of company interests held in the trust.

Trust protectors often hold powers such as removing and replacing trustees, amending trust terms, or vetoing distributions. If those powers extend to directing disposition of the trust’s ownership stake in a company, the protector qualifies just as a trustee would. Overlooking a trust protector or investment advisor with these powers is one of the easier mistakes in this area, and the only reliable way to catch them is a page-by-page read of the trust agreement.

One Trust, Multiple Beneficial Owners

Because each role is tested independently, a single trust regularly produces several reportable individuals. Co-trustees may each qualify through substantial control, a living grantor may qualify through retained revocation rights, and a sole beneficiary may qualify through exclusive distribution rights, all from the same trust. FinCEN has confirmed that there is no maximum number of beneficial owners a reporting company can have.⁵

The practical consequence: one line on the company’s ownership chart labeled “held by the Smith Family Trust” can translate into four or five people who each need to be identified, documented, and reported. Every role in the trust document needs its own walk-through against both tests.

The 25% Threshold and When It Doesn’t Apply

The ownership-interest pathway triggers only when the trust holds at least 25% of the reporting company. Calculating that percentage depends on the entity type.⁶

For corporations, calculate the trust’s shares as a percentage of total outstanding shares. If different share classes carry different voting power or value, calculate both percentages and use the larger.
For partnerships, calculate the trust’s capital and profit interests as a percentage of total outstanding capital and profit interests.
For LLCs and other entities where neither formula fits, ask whether the trust holds 25% or more of any class or type of ownership interest.

Outstanding options, warrants, and convertible instruments are assumed exercised for this calculation, which can enlarge the denominator and change whether the trust crosses the threshold.⁶

Keep in mind that the 25% cutoff governs only the ownership pathway. Anyone exercising substantial control over the reporting company through the trust is a beneficial owner no matter how small the trust’s stake.

Individuals Who Are Carved Out

Some people who would otherwise qualify are excluded by the regulation itself.

Minor children who would be beneficial owners are not reported. The company instead reports information for the child’s parent or legal guardian and notes on the filing that the information relates to a parent or guardian. Once the child reaches the age of majority under the law of the state or tribal jurisdiction where the company was created or registered, an updated report with the individual’s own information is required.⁶

Someone acting purely as a nominee, intermediary, custodian, or agent for another person is not a beneficial owner. A partnership representative or tax matters partner serving only in a designated agent capacity can fit this exception, though the person on whose behalf they act may still qualify.⁵

Accountants and attorneys providing ordinary professional services are generally not beneficial owners, because arm’s-length advisory work does not amount to substantial control. But an individual serving as general counsel is classified as a senior officer and is a beneficial owner.⁵ The line runs between outside advice and a governance role.

What Has to Be Reported for Each Trust-Related Beneficial Owner

For every individual identified through the trust structure, the reporting company must collect and submit:

Full current legal name, even if it differs from the name on the identification document because of a recent name change.⁵
Date of birth.
Residential address. A business address or P.O. box generally will not work.
A unique identifying number from a non-expired U.S. driver’s license, state or local government ID, U.S. passport, or (only if none of the others are available) a foreign passport, along with a clear image of the document.⁵

Individuals who serve as beneficial owners for multiple entities — professional trustees are the classic example — can apply for a FinCEN Identifier and give that number to each reporting company in place of the underlying personal information.⁷

Once someone is identified, changes matter. When a trustee is replaced, a beneficiary moves, or a grantor revokes the trust, the reporting company has 30 days from the change to file an updated report; corrections to previously reported information carry the same 30-day window from the date the company learns of the error.⁵ Trust administration is not a one-time exercise for beneficial ownership purposes; the roles need to be re-checked whenever the trust or the underlying company changes shape.

1
Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting
2
Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension
3
eCFR. 31 CFR 1010.380 – Reports of Beneficial Ownership Information
4
eCFR. 31 CFR 1010.380 – Reports of Beneficial Ownership Information – Section (d) Beneficial Owner
5
Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting Frequently Asked Questions
6
Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting Requirements Small Entity Compliance Guide
7
Financial Crimes Enforcement Network. FinCEN Identifier Step-by-Step Instructions