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Step Into May — It’s Already Looking Fabulous!
may newsletter for website
Author: Mercy Kurian
April Unfolds: Festivals, Flowers & What Matters
March Into Magic: Horses, Humor & Happily Ever Afters
New FinCEN Residential Real Estate Reporting Rule
What Is Changing?
Beginning March 1, 2026, if you are planning to purchase residential real estate either in an all cash transaction or by privately financing the purchase and you plan to have an LLC or corporation trusts own such property, then you must be report this transaction to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The purpose of this reporting requirement is to increase transparency in the U.S. residential real estate sector and to combat and deter money laundering.
When Does This Apply?
A report is required if ALL of the following apply:
✔ The property is residential (1–4 family home, condo, co-op, townhome, or residential land)1
✔ The purchase is non-financed (no bank loan secured by the property)
✔ The buyer is a legal entity (LLC, corporation, partnership) or trust; and
✔ No exemption applies (death, divorce, court order, etc.)
What Information Must Be Reported? NOTE: One report is filed per transaction.
The person filing the deed must report:
• Property details
• Seller information
• Buyer entity or trust information
• Beneficial owner information (name, DOB, address, Tax ID, citizenship)
• Total purchase price and payment details
These reports will be maintained by FinCEN in a secure database along with other Bank Secrecy Act (BSA) reports and, like any other BSA report, will be subject to strict limits on use and redissemination. Real Estate Reports will not be accessible to the general public.
1 Properties are considered residential real property even if there is also a commercial element—a single family residence that is located above a commercial enterprise, for example. Additionally, certain types of land on which a residence is not yet built are also included if the transferee intends to build on the property
one or more structures designed principally for occupancy by one to four families
What This Means for You
If you are purchasing residential real estate through an LLC or trust OR our firm is helping you with the deed transfer to an LLC or trust:
• Expect requests from us (or from anyone preparing the deed) for beneficial ownership information
• Allow additional time for the deed to be recorded while this information is collected
• Expect increased fees to be collected as part of the filing fees.
• Expect that if it is determined that you are not exempt, then know that this filing cannot be waived
Exemptions
• Transfers are not reportable if they involve extensions of credit by financial institutions as those institutions that have to abide by their own reporting requirements2
.• Transfers incident to a divorce or dissolution of marriage or civil union
• Testamentary trusts created by Wills
• Transfers for no consideration made by an individual and/or the individual’s spouse into a revocable trust
Questions?
If you are planning to purchase property through an entity or trust, and need our firm to help you with the deed transfer, then please contact our office early in the process so we can coordinate compliance amongst our team. If we have advised you that you will need a deed transfer as part of your estate planning, then please expect additional time for us to gather the necessary information as well as increased filing fees to be compliant with this requirement.
2 But if the property already has a mortgage on it and our firm is now preparing the deed transfer to LLC or irrevocable trust, we will still need to abide by this additional reporting requirement in addition to obtaining lender consent.
Step-Up in Basis and Joint Trusts
False
The income tax treatment of assets at death is governed by Internal Revenue Code §1014, which generally provides for a step-up in basis to fair market value for property included in a decedent’s gross estate. This means that there is sometimes a significant benefit to holding appreciated assets in one’s own name rather than “selling” them during lifetime and incurring capital gains. It’s important to understand that when married couples hold accounts jointly, 50% of the account is considered to be the other spouse. These are especially important considerations for divorce, gift and death tax purposes.
Community Property vs. Equitable Distribution
Before we begin to see the connection between basis and how property is held in a particular state, we need to understand the difference between community property and equitable distribution. In community property states, IRC §1014(b)(6) provides that both the decedent’s and the surviving spouse’s one-half interests in community property receive a full step-up in basis at the first spouse’s death. As a result, 100% of community property may be sold by the surviving spouse with minimal or no capital gains tax. Joint trusts in those jurisdictions are often designed to preserve community property character and efficiently implement this favorable tax treatment.
New Jersey, by contrast, is an equitable distribution state. Ownership controls. At the death of the first spouse, only the decedent’s ownership interest in an asset receives a basis adjustment. The surviving spouse’s interest retains its historic carryover basis. Accordingly, the use of a joint trust in New Jersey does not replicate community property treatment and does not produce a full step-up in basis.
Limitations of Joint Trusts in Equitable Distribution States
In an equitable distribution state, a joint trust:
• Does not alter underlying ownership interests
• Does not convert assets into community property for income tax purposes
• Does not trigger a full basis adjustment under IRC §1014
In practice, joint trusts may also introduce ambiguity regarding ownership, reduce post-mortem planning flexibility, and complicate basis optimization strategies. Therefore, in New Jersey and other non-community property states, separate revocable trusts, coupled with deliberate asset titling, typically provide greater clarity and tax planning precision.
So… What Are You Doing This February?
Emergency Preparedness for People With Disabilities
Did you know that if you or loved one has a disability you may be entitled to a priority power restoration in the event of a electrical outage? Or that your local community may have designated special needs shelters with electrical outlets and medical support in the case of emergency evacuations? Read this really important article by SNA member Attorney Ashley Shannon Burke who presents some eye-opening and practical tips on how families with loved ones with disabilities can prepare for emergencies. Follow the articles guidelines on steps you can take now to be prepared in the future which will give you some peace of mind.
Hello January: New Beginnings, Winter Wonders, and 10 Years of RLG
Lights, Laughs and Lots to do
Newsletter dec 2025
Click here to read: ” Think your home is covered under your policy? Check out this article for a common pitfall”
Think your home is covered under your policy? Check out this article for a common pitfall
FALSE
You bought your home several years ago. You and your spouse were all excited about the purchase. You did everything you were supposed to do at that time – i.e got your recorded deed, set up the mortgage, got title insurance, set up the electric and water/sewer accounts, then called up your homeowner’s insurance policy to start up a policy. But…did you inadvertently skip naming your spouse on the policy?
This past week we had not one but two instances where we found out (post death of one spouse) that the surviving spouse’s name was never listed on the policy. How did we find out? In one case, we had transferred the house into an irrevocable trust to do some pre- planning for Medicaid. The house got recorded in the name of the trust and when the spouse called to add the trust as an additional insured, she found out that she had no authority to do so!! Many irate phone calls later and several calls to coordinate trustee availability across different time zones, we were finally able to get the trust and the surviving spouse listed on the policy. What should have been a 5min call took almost 10 days to resolve along with undue stress and inconvenience for all parties involved. Additionally, what if the problem was never discovered and the house suffered damage during this time? What if there was a fire/theft/flood that required the spouse to file a claim?
Well, that is where all the problems begin. The insurance company could likely deny reimbursement of claims because the spouse was not on the policy.
Spend a few minutes and check your policy coverage today. If your spouse’s name is missing, call the company immediately to add him or her on! And of course, always consult with your counsel before doing anything that could impact your overall estate plan.