Whether you intend to use a trust to pass on your assets after you pass, you’re creating one to provide your children with money to live on as adults, or for any other reason, most types of trusts are required to obtain an EIN number. There are several reasons for this.
You Are Creating an Irrevocable Trust
An irrevocable trust is one that you cannot change once you create it. When you transfer assets from your estate to the trust, you forfeit ownership and it becomes a separate entity. When this happens, an EIN number for estate proves the trust’s assets cannot be used for your taxes or to pay your creditors.
You Inherited a Trust Fund
Sometimes, a person creates a revocable trust, which means he or she can make changes to it at will until the time of death. When someone who holds a revocable trust passes away, the assets go to the trustee. As a trustee, you’ll need to apply for an EIN for trust after death. This is because the grantor’s passing automatically turns it into an irrevocable trust.
It Lets You Pay the Necessary Taxes
When you inherit a trust, you’ll need to apply for a tax ID number for it through a company such as IRS-EIN-Tax-ID so that you can pay the necessary taxes. Because the grantor passed away, you won’t be able to use his or her social security number to pay taxes on the trust, nor will you be able to use your own social security number. Applying for the EIN ensures that you handle everything legally and don’t get caught up with the IRS in the future.
Applying for an EIN
Applying for an EIN for a trust requires a few simple pieces of information, and the quick and easy approval process means most applicants receive their nine-digit number within three or fewer business days. To learn more about the EIN application, contact the qualified professionals at IRS EIN Tax ID Filing Service.