USA – CALIFORNIA Law and Practice Contributed by: Jennifer Jordan McCall, Matthew Perotti, Maria Williams and Alexandria Marx, Pillsbury Winthrop Shaw Pittman LLP
are required to report the assets on IRS Form 8938. In 2026, the reporting threshold ranges from USD50,000 to USD150,000 for individuals living in the US and USD200,000 to USD600,000 for individuals living out - side the US. In addition, if a US person, resident alien, trust, estate, or domestic entity has a financial interest in or sig - natory authority over an offshore financial account, the account must be reported on FinCEN Form 114, Report of Foreign Bank and Financial Accounts, or FBAR. The information requested on each form is dif - ferent, thus due to the different rules and differences in the definition of “financial account”, not every tax - payer will need to file both forms or report the same foreign financial accounts. Reporting is required if the aggregate value of any one or more financial accounts exceeds USD10,000 at any time during the calen - dar year. Notably, residents of US territories are not included in the definition of “United States” for Form 8938 reporting, while resident aliens of US territories and US territory entities are subject to FBAR reporting. The United States Corporate Transparency Act The Corporate Transparency Act (CTA) originally required many corporations, limited liability compa - nies and similar entities created or registered to do business in the United States to report beneficial own - ership information to FinCEN, unless an exemption applied. A beneficial owner generally included any individual who, directly or indirectly, exercised sub - stantial control over the entity or owned or controlled at least 25% of its ownership interests. However, FinCEN issued an interim final rule, pub - lished on 26 March 2025, substantially narrowing the CTA reporting regime. Domestic reporting companies, including California corporations and limited liability companies, are exempt from BOI reporting require - ments and are not required to file, update or correct BOI reports. The reporting regime now applies prin - cipally to foreign entities that are formed under non- US law and registered to do business in a US state or Tribal jurisdiction. Foreign reporting companies are not required to report BOI for beneficial owners who are US persons.
Accordingly, for most California private wealth struc - tures involving domestic family entities, the CTA is currently far less burdensome than originally antici - pated. Cross-border structures involving foreign com - panies registered to do business in the US should still be reviewed for potential CTA reporting obligations. 2. Succession 2.1 Cultural Considerations in Succession Planning In the US and California, high net worth families often engage in strategies with skilled advisers to seek to reduce the high transfer tax, which can decimate their family’s often hard-earned assets. Many such strate - gies, when correctly implemented, can be very effec - tive. Additionally, younger generations may become disincentivised to work if they receive too much gra - tuitous wealth, and trusts are often used to limit unfet- tered access to inherited wealth, while also protecting assets from potential attacks from third-party credi - tors or others seeking to obtain the assets. As the cost of living, education, and taxes continues to escalate, many families in the US tend to have fewer children Individuals and entities subject to California law rou - tinely have businesses and families in multiple other jurisdictions. Planning for succession and wealth transfer for these family members is done in compli - ance with the laws of the relevant jurisdictions, and in consultation with local counsel as required. 2.3 Forced Heirship Laws California does not have a forced heirship regime, however, in some cases, California courts may apply the law of another jurisdiction to an estate adminis - tered in California which may include a forced heir - ship regime. For example, the State of Louisiana has rules to prevent a testator from disinheriting his or her children. Texas, New York, Florida, and California laws force heirship between the decedent and their surviving spouse. than was historically the case. 2.2 International Planning
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