May 18, 2011
Category: Wills & Trusts
Tax time tends to bring up all kinds of questions and concerns, especially for clients who have established a trust. One of these questions is, “do I need to get an EIN (Employer Identification Number) for my revocable living trust?”
In general, as long as you are alive and well and acting as trustee, you don’t need to get an EIN (sometimes also called a TIN – Taxpayer Identification Number) for your revocable living trust. This is because, under IRS rules, a trust only needs an EIN if it is a “separate income tax payer”. While you’re alive and healthy, your social security number is used to identify your trust to the IRS, and you report income from your trust as personal income.
When is an EIN required for a living trust?
· If You Become Incapacitated: Your living trust most likely names a successor trustee to take over for you in the event you’re declared mentally incapable of managing your own affairs. If, in the future, you suffer an injury or illness that renders you unable to continue serving as trustee, your successor trustee (or his or her attorney) might determine that it’s necessary to obtain an EIN for your trust and file a separate tax return (Form 1041)on behalf of the trust.
· Upon Your Death: If your living trust becomes irrevocable at your death (for example, if you don’t have a surviving spouse who is a co-grantor and co-trustee), then your successor trustee will obtain an EIN for your trust, and file a separate tax return for the trust.
· If Your Lawyer Determines It’s Necessary. There are certain specific circumstances under which your attorney might determine that it’s necessary to obtain an EIN on behalf of a living trust, even if the person who established the trust is alive and well. For instance, some government agencies require that a trust have a separate EIN in order to qualify for certain services or benefits.
When in doubt, check with an experienced estate planning attorney. He or she can let you know what does – or doesn’t – need to be done.