Is an EIN Required for a Trust After Death?

Losing a family member can be an emotional and trying experience for everyone affected. Unfortunately, tax problems brought on by a trust can sometimes be an added stressor. Because grantors don’t always acquire an employer identification number (EIN) for their trusts, their heirs or beneficiaries may have to do so after the fact. If the grantor of a revocable trust has died, making the trust irrevocable, you will need to complete the application for an EIN.

Estate planning can be complex, which is why it can help to work with an expert. Consider finding a financial advisor who offers estate planning as part of their suite of services.

What Is an EIN?

An employer identification number (EIN) is a tax identification number assigned by the IRS to distinguish trusts, estates, and business entities when reporting income. Much like a Social Security number for an individual, an EIN is used to identify an entity for federal tax purposes.

Through the EIN, the IRS can monitor income, deductions, and any tax filings related to the entity. Although many employers use one for payroll and business reporting, trusts that produce taxable income or function independently from their grantors must also have an EIN. You can request one at no cost by submitting IRS Form SS-4 online, by mail or by fax.

Is an EIN Required for a Trust After Death?

Whether your trust needs an EIN depends on the trust in question. All trusts legally move wealth to your beneficiaries, but the type of trust and who it benefits can vary. Typically, it will either be revocable or irrevocable.

A revocable trust, also called a living trust, may be appropriate if the grantor wants to modify the trust after creating it or reclaim the assets. Alternatively, an irrevocable trust places assets into the trust irreversibly. Once you make an irrevocable trust, you no longer own the assets therein. You can only adjust or revoke the trust if you gain authorization from the beneficiaries.

An irrevocable trust requires an EIN. This condition is especially pertinent for filing taxes and selling or purchasing assets. On the other hand, a revocable trust only requires your Social Security number because the creator includes the trust’s gains on their tax return.

However, it’s recommended that you use an EIN for either kind, specifically because the grantor’s death means the trust becomes irrevocable. Once the grantor passes away, the trust needs its own tax number, as the grantor’s Social Security number is no longer sufficient.

Therefore, while a revocable trust does not initially need an EIN, it’s an excellent idea to apply for one just as you would for an irrevocable trust to avoid difficulties managing it.

What Information Do You Need for an EIN?

When applying for an EIN, the IRS requires basic details about the trust and the person responsible for managing it. This individual, known as the trustee, oversees the trust’s assets and distributions. The trustee must provide their legal name, Social Security number, and contact information, along with the trust’s name, date it was established, and its purpose. These details allow the IRS to correctly identify the trust and assign a unique EIN for tax reporting.

How to Apply for a Tax ID Number (EIN) for Trusts

There are three means of applying with the IRS for an EIN: online, mail or fax. Online is faster and more straightforward, but if you aren’t comfortable or don’t have access to the Internet, you can use one of the other options. The details for each are below.

Online

The IRS offers an online application portal where you can complete and submit Form SS-4 electronically. As long as you have the required information about the trust and trustee, the process usually takes just a few minutes. Once verified, the IRS immediately issues a nine-digit EIN, allowing you to begin filing or managing trust activities without delay.

Mail or Fax

Mail or fax requires you to print out the SS-4 form and fill it out. Then, you can mail or fax the finished paperwork. If you send it by mail, you will need to provide postage. The IRS will perform its validation process and send you the EIN through the same means through which the application came. Therefore, if you mailed your application, your tax number will come in the mail and faxed applications will have a faxed EIN.

Either of these methods will take significantly longer than applying online. Faxed applications usually take a week, while mailed applications often take two weeks or more for the EIN to reach you. Understanding the timetable for your application can save you the stress of waiting for an EIN that takes longer than expected. If you have a pressing need for your trust, mailing your application may not be a good idea, as it will take multiple weeks for the IRS to provide identification for your trust.

Bottom Line

If you’ve recently established a revocable trust, you may choose to obtain an EIN right away, even though it isn’t required while you’re alive. This proactive measure will help your beneficiaries and your trustee manage the trust years down the road. If you’re a beneficiary trying to sort out a trust that has become irrevocable, the IRS’s online application process will help you acquire an EIN for the trust in question. If you have the necessary information available, you could get an EIN in minutes.

Tips for Estate Planning

If you’re wondering how to create a trust or allocate your assets, you don’t have to go it alone or leave it to a real estate attorney. A financial advisor can take a more holistic look at your finances. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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