Many of us do not know what a trust account is. A trust is created to allow the creator to transfer wealth or assets to his or her beneficiary or beneficiaries legally without the need for public probate. Properties and assets place in a trust enjoy financial privacy, avoids estate taxes, and the property and assets are protected from the beneficiaries’ creditors.
A trust can be revocable or irrevocable.The grantor of an irrevocable trust is required to apply for EIN or a separate Employer Identification Number for the purpose of tax identification by the Internal Revenue Service. In the case of a living or revocable trust, the grantor’s social security number is used instead.
Creating a revocable or a living trust allows the creator the freedom to change the terms of the trust or terminate the trust. Once an irrevocable trust is created, the owner loses the right of ownership and permanently transfer his or her assets into the trust. Unless the beneficiary permits, the terms of an irrevocable trust cannot be changed or the trust be cancelled.
A revocable living trust does not need a separate EIN while the grantor is still alive because any income generated by the assets held in trust are claimed on the grantor’s individual income tax return. Upon the death of the grantor, application for separate EIN for trust after death is required as soon as possible to simplify tax filing, asset management, and financial transactions. Application can be done quickly and easily by filling the necessary form with the help of the IRS online guide.
Application for an estate tax id orEIN number for estate is required of those who are acting as an estate executor.An Estate executor needs to manage all the property and assets a person owns or controls. Estate property may be in the deceased person’s name, held in a partnership or through a trust and may include items such as real estate, life insurance, bank accounts, retirement accounts and all other monies generated upon the person’s death.
The application steps are very simple. On the online form, select the identity type and choose “Estate of Deceased Individual” and then enter the deceased person’s information and the executor’s personal information. Once the application is completed and sent, an EIN will be assigned and will be sent through e-mail.