An ultimate beneficial owner is the natural person who owns or benefits from a given entity.
For example, take LLC #2 here. LLC #2 is owned by Asset Management LLC. The Asset Management LLC is owned by John Smith.
If you went to the bank to open an account for LLC #2, the bank would want to know who the owner is.
If you tell them the owner is the Asset Management LLC, they would want to know who owned the Asset Management LLC.
The bank is looking for the Ultimate Beneficial Owner, and that is John Smith in this example. They are required by law to know who they are working with.
There could be a dozen layers of LLCs, and the bank would dig until they got to that ultimate beneficial owner. They are looking for the human that is behind all the layers.
Colin Ley is an asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
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