A trust a special legal structure in which people named trustees effectively manage assets on behalf of people known as beneficiaries. Some people will set up what are called revocable trusts, which they manage during their lifetimes but upon their deaths are managed by other trustees on behalf of the people they designate, such as their children or grandchildren. This can help simplify inheritance and save heirs money by avoiding a probate process when the person who set up the trust passes away.
You often don't need an Internal Revenue Service employer identification number for a revocable trust while the person who set it up is alive, but if you do need a trust EIN number, you can get one online, by mail or by fax from the IRS.
How and When to Get a Revocable Trust EIN
Any trust set up while the person who starts it, called the grantor, is alive is known as a living trust. Some such trusts are irrevocable, meaning once it's created the grantor generally can't change the terms, and others are revocable, meaning the grantor can change the trust arrangement while still alive.
Generally, a revocable trust isn't treated differently for tax purposes while its grantor is still alive. Its assets are considered the assets of the grantor, and its income and losses are simply handled through the grantor's personal tax return. Revocable trusts generally do not save on taxes, either during life or on estate taxes when the grantor dies.
Rather than using a separate employee identification number from the IRS the way a corporation or irrevocable trust would, it simply uses the grantor's Social Security number as the trust tax ID number. Exceptions can apply, though, if the trust has trustees other than the grantor himself or herself or if one grantor has many trusts.
If and when the trust does need an EIN, the trustees can apply for one through the IRS website. You can also apply for one by fax or postal mail using IRS Form SS-4.
When You May Need a New EIN
In some cases, you may need to get a new EIN for what was a revocable trust, even if the trust already happened. This can happen when the grantor passes away, if the trust converts either to an estate or to a testamentary trust, meaning one set up by someone's will.
You don't need to get a new EIN simply for a change in trustees or if the beneficiary changes his or her name or address.
2018 Tax Law Changes and Revocable Trusts
The changes coming for tax laws in 2018 don't directly affect the process for getting an EIN or when a revocable trust might need one.
They do, however, increase the minimum estate value that's subject to estate tax, which might change when people choose to use a revocable trust versus some other, more tax-sheltered way to pass on assets after death. For 2018, estates valued at less than $11,180,000 are generally not subject to federal estate tax.
Estate Tax in 2017
As of tax year 2017, estates valued at less than $5.49 million are not subject to estate tax. This may affect people's decisions about whether to use revocable trusts or other vehicles to hold their assets and effectively transfer them to heirs.
- When a revocable trust is assigned an EIN, the trust must report activities each year on IRS Form 1041.
- Law Offices of Jeffrey R. Gottlieb: Estate and Trust Tax ID Numbers: FAQ on the EIN from the IRS
- The Motley Fool: Is an EIN Required for a Revocable Trust After Death?
- IRS: Apply for an Employer Identification Number (EIN) Online
- MI Elder Law: Tax Issues for Trusts
- Kiplinger: Four Facts of Living Trusts
- IRS: Employer Identification Number
- Nolo: Other Advantages of a Living Trust
- Investopedia: Inter-Vivos Trust
- Investopedia: Irrevocable Trust
- IRS: About Form SS-4, Application for Employer Identification Number
- Fiduciary Trust International: The Benefits and Shortcomings of Revocable Trusts
- Forbes: IRS Announces 2018 Estate And Gift Tax Limits: $11.2 Million