TRUST | EIN APPLICATION
A Trust is a legal agreement between multiple parties each having their own function. The person making the trust is known as the grantor. The grantor transfers legal ownership of their property to a party known as the trustee. The trustee manages and/or invests the assets within the trust for the benefit of a separate party or parties known as the beneficiary or beneficiaries. A trust can be established while the grantor is alive (known as a living trust) or inside a will (known as a testamentary trust). Additionally, a trustee can be either an individual or group of individuals (such a mutual fund). Likewise, the beneficiary or beneficiaries can also be one individual or a group of individuals. There are two primary types of trusts when it comes to estate planning a revocable and irrevocable trust.
WHAT IS A REVOCABLE TRUST?
A revocable trust allows the grantor of the trust to make alterations or changes to the trust at their discretion. Additionally, the grantor can use the trust to pay for medical expenses or even to generate income. This type of trust can also be written as to when the trustee will take control of the trust. This can be during the grantors lifetime or after the grantor passes. Another benefit to this type of trust is a grantor can have it where separate amounts of money are passed to the beneficiaries in increments as opposed to waiting for the grantors passing for a full distribution. The disadvantage to this type of trust is that it is cumbersome to manage and can be quite costly. It must be managed and updated during the grantor’s lifetime. Additionally, there are no tax or asset protection benefits from this type of trust.
WHAT IS AN IRREVOCABLE TRUST?
An irrevocable trust is a legal agreement where funds or assets can be transferred from a grantor (individual or company) to a beneficiary with the trustee acting as the intermediary. There is usually a designated timeframe or set of conditions that must be met from the time the trustee takes control of the trust to the time ownership is transferred to the beneficiary. There are common uses for this type of trust. One such reason is for a parent to transfer monies or assets to their child in the form of a gift, but the child may not receive these benefits until a predetermined age. Another reason for this type of trust is asset protection where the grantor can remove assets from themselves but can still continue to receive income from those assets. An irrevocable trust cannot be altered or changed once it is put into place.
WHAT IS AN EIN NUMBER?
The Employer Identification Number (EIN), also known as the Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number (Tax ID Number), is a unique 9 digit number assigned from the IRS. The digits of an EIN are formatted as follows: XX-XXXXXXX. Entrepreneurs and businesses use an EIN to conduct business activities that would otherwise require a Social Security Number (SSN).
DO I NEED AN EIN FOR A TRUST?
There are different types of trusts and therefore there are different requirements from the IRS. In the occasion of a Living or Revocable Trust, no Tax ID number is needed, as the living grantor can use his Social Security Number. If the grantor passes away, the revocable trust automatically becomes an irrevocable one. In this case, the deceased grantor’s Social Security Number cannot be used anymore and must be replaced by a Federal Tax Id Number also known as an EIN number.
GENERALLY, GETTING A FEDERAL TAX ID NUMBER WILL MAKE IT EASIER IN CASE YOU NEED TO:
- File taxes
- Manage assets
- Conduct various financial transactions
HOW TO GET AN EIN NUMBER FOR A TRUST:
Apply now and obtain an Employer Identification Number (EIN) by filling out the EIN Online Application form. It is Easy, Fast and Secure. After you complete the online process you will receive your EIN together with important information within 1-2 business days.