New York LLC Transparency Act and the Business Trust
Starting on January 1st 2026 any domestic or foreign LLC operating in the state of New York must disclose private information about the owners into a state database. The law is similar to the FinCEN Corporate Transparency Act which is now on hold.
Politicians recognize that bad guys are using Corporations and LLC to hide dirty money. We do too. However, statistics demonstrate that roughly 95-97% of the people behind them are honest.
The issue is that a few business owners and real estate investors prefer discretion and privacy. They don’t want even more compliance hassles, and they don’t want their information in another government database. What to do?
Long before LLC’s were invented Business Trusts were used to hold, manage and operate business interests. Centuries of history attest to this fact and they were based upon trust law and common law.
Fast forward and we see various states such as New York create a business trust based upon statutory law.
You have the option of using either statutory or common law format.
Statutory Law or Common Law
If you choose statutory, file a registration with the Secretary of State. Details are found in Assembly Bill A6128. Subdivision 2 – Section 212 requires filing of a public certificate containing trustee name, address of principal business, rights and obligations of beneficiaries.
But if you choose non-statutory format there is no registration. There is no certificate. They’re private and unlisted on the internet.
Where this format remains private is within the public domain, also known as the internet. Visible assets are risky these days because of hackers, identity thieves, and frivolous plaintiffs. This is main reason why many prefer to do without the state.
- In both formats the trust instrument is fully documented, executed and notarized by the participating parties. Trustees have a fiduciary duty to their beneficiaries.
- Both formats are fully transparent to a variety of authorities including financial institutions and tax agencies.
- Business Trusts have validation from the US Supreme Court. They also have validation from the IRS. And they’re fully compliant with trust law in all 50 states.
Summary
For those who prefer an alternative to the LLC, the form of ownership structure that is more private, easier to operate and unlisted online, is a business trust.
