SOCIAL SECURITY 2023 UPDATE SSI FOR NYS RESIDENTS Individual $1,001/month Couple $1,475/month MAXIMUM TAXABLE…
** This article has been revised from its original version which was published on July 9, 2018
A trust identification number identifies a trust, like any other legal entity, for tax purposes. You need a trust identification number in order to put assets into your estate planning trust. The number will always be either:
- The grantor’s Social Security Number
- Issued by the IRS, known as an Employer Identification Number, or EIN
An EIN from the IRS functions like a Social Security Number for the trust. In the context of a trust, it has nothing to do with employment.
Whether the Grantor’s Social Security Number or an EIN is used to identify your trust depends on three factors:
- Whether the trust is revocable or irrevocable
- Whether the grantor is alive or has passed away
- Whether income-producing assets are being held in the trust
A revocable trust is considered an extension of the individual who creates the trust (the grantor). As such, any income the trust assets produce is reported on the grantor’s personal income tax return. While the grantor is alive, the grantor’s Social Security Number will serve as the trust identification number.
An irrevocable trust is a bit different, as it is most often used to separate a person from their property in order to preserve it for the grantor’s beneficiaries at the time of the grantor’s death. If the only asset going into the trust is the grantor’s home which doesn’t produce any income, then the trust identification number, as in a revocable trust, can be the grantor’s Social Security Number. However, if the grantor is considering putting income-producing assets into the irrevocable trust, then an EIN should be obtained and used as the trust identification number instead.
Regardless of whether a trust is revocable or irrevocable, an EIN will also need to be obtained – if it was not previously obtained – when the grantor passes away. The grantor’s Social Security Number will be deactivated and no longer used to identify trust assets.
Getting an Employer Identification Number involves gathering information from the grantor and the trust to answer a series of questions for the IRS, which can currently be done online, by mail, or by fax. You can also get help from an estate planning attorney. Once the questions are answered, the IRS will issue an EIN to serve as the trust identification number. If the process is completed online, the EIN will be generated instantly and displayed on the screen.
To Sum It All Up
For a revocable trust, the trust identification number is the grantor’s Social Security Number if the grantor is alive and an EIN if the grantor is deceased.
For an irrevocable trust, the trust identification number is the grantor’s Social Security Number if the grantor is alive, the trust holds only assets that do not produce income, AND the grantor has not elected to have an EIN assigned. Or an EIN is used if the estate planning trust holds income-producing assets, the grantor is deceased, or the grantor has elected to have one assigned.
When creating a trust, it is important to consult with and retain experienced attorneys about the correct use of a trust identification number based on the type of trust and how you intend to use it. The estate planning attorneys at Russo Law Group, P.C., can explain different types of trusts and recommend the right one for your situation. Contact us or take advantage of our free seminars and webinars to learn more about how Russo Law Group, P.C., may assist with revocable and irrevocable trusts.
Lauren E. Soule
Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530