How to Get an EIN Number for a Trust Account
Properly administer a trust by obtaining its required federal tax ID. Learn the necessary steps for navigating the IRS process to fulfill your duties as a trustee.
An Employer Identification Number, or EIN, is a nine-digit number the Internal Revenue Service (IRS) assigns to identify business entities for tax purposes. While often associated with corporations, certain trusts also require an EIN to manage their tax obligations. A trust is a legal arrangement where one party, the trustee, holds assets on behalf of another, the beneficiary.
Understanding when a trust needs an EIN is important for proper administration. The need to obtain this number hinges on the trust’s structure and specific life events, which determine whether it is a separate taxable entity. This allows the IRS to track the trust’s financial activities and ensure compliance with federal tax law.
Determining if a Trust Needs an EIN
The main factor in determining if a trust needs an EIN is whether it is revocable or irrevocable. A revocable trust, often called a living trust, is created by a grantor who retains control over the assets and can modify or dissolve the trust during their lifetime. While the grantor is alive, the trust is not a separate entity for tax purposes, and income is reported on the grantor’s personal tax return using their Social Security Number (SSN).
The situation changes when the trust becomes irrevocable. A trust can be established as irrevocable from its inception, meaning the grantor cannot easily change its terms or reclaim the assets. In this case, the trust is considered a distinct taxable entity and must obtain an EIN from the start if it holds income-producing assets.
A common event that triggers the need for an EIN is the death of the grantor of a revocable trust. Upon the grantor’s passing, the trust automatically converts into an irrevocable trust, and the grantor’s SSN can no longer be used. The successor trustee must then apply for an EIN to manage the trust’s finances and file required tax returns.
Information Required to Apply for a Trust EIN
Before applying for an EIN, a trustee must gather specific information to complete IRS Form SS-4, “Application for Employer Identification Number.” This form requires precise details about the trust and the individuals associated with it, including the legal name of the trust as stated in the trust document and the date it was legally created. The form can be downloaded directly from the IRS website.
The application also requires identifying information for the trustee, who is the individual or institution responsible for managing the trust. This includes the trustee’s full name, mailing address, and their Taxpayer Identification Number (SSN or ITIN).
A key part of the application is identifying the “responsible party.” For a trust, the responsible party is the person who ultimately owns or controls the entity, which is the grantor who established the trust. The responsible party’s full name and their SSN or ITIN must be provided on Form SS-4. The application will also ask for the trust’s mailing address and type, which is “Irrevocable Trust” in most cases requiring an EIN.
How to Obtain the Trust EIN
Once Form SS-4 is completed, the trustee can submit the application through one of several methods. The fastest method is the online application via the IRS’s EIN Assistant tool. This interactive session guides the user through a series of questions, and upon successful validation, the EIN is issued immediately, allowing the trustee to save or print the confirmation notice.
For those who prefer not to use the online system, applying by fax is another option. The completed and signed Form SS-4 can be faxed to the appropriate IRS service center, and the turnaround time is generally several business days. The IRS will then fax the trust’s new EIN to the number provided on the form.
The slowest method is by mail. A trustee can mail the completed Form SS-4 to the designated IRS address listed in the form’s instructions, and this process can take several weeks. Regardless of the submission method, the IRS will mail a formal confirmation letter to the trust’s mailing address once the application is processed.
Post-Issuance Responsibilities
Receiving the EIN marks the beginning of the trustee’s responsibilities in managing the trust’s tax obligations. The first action is to open a bank or investment account in the legal name of the trust using the newly assigned EIN. This separates the trust’s assets from any personal or other entity funds, which is an important step in proper trust administration.
The trustee must provide the EIN to all financial institutions, such as banks and brokerage firms, where the trust holds assets. This ensures that any income earned, like interest or dividends, is correctly reported to the IRS under the trust’s EIN. Failure to do so can lead to reporting errors.
A primary ongoing responsibility is filing the trust’s annual income tax return. The trustee must use the EIN to file Form 1041, “U.S. Income Tax Return for Estates and Trusts,” for any year in which the trust has a gross income of $600 or more. This form reports the trust’s income, deductions, and any distributions made to beneficiaries.