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Do I Need a Tax ID Number?

This question keeps coming up… “Does a trust need a separate taxpayer identification number?” It depends. In general

* Revocable Living Trusts do not need an EIN/Taxpayer ID if the Trustor(s) are still alive: As long as that person is alive, it is their trust, they are the trustees, they are the beneficiary, and they control everything. There is ABSOLUTELY no need for a separate taxpayer ID number.

* Irrevocable Trusts generally DO need a separate EIN

* Hybrid Irrevocable Trusts: Like an intentionally defective grantor trusts do not need an EIN if the trustor is also the beneficiary who receives the income and therefore the tax bills

In this podcast, I go over the three main trusts we utilize in my law practice with a focus on the “hybrid” Irrevocable Property Trust, which is also classified as an Intentionally Defective Grantor Trust. At the end of the day, banks and financial institutions setting up accounts need SOME taxpayer ID numbers to identify who is responsible for the taxes. In some cases, a social security number may be the most appropriate, and it can prevent harassing letters from the IRA demanding a 1041 tax filing for a trust that does not need to file one.

You can listen to the entire podcast regarding EINs and Trusts by Clicking Here.

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