Does a Revocable Trust Need an EIN?
Apart from the false belief that getting a revocable trust must be exclusively for the wealthy, the second reason most people tend to shy away from setting one up sooner is the assumed tax implications. This guide helps you with answers to questions:
- What is a revocable trust?
- Do I need an EIN for a revocable living trust?
- How can I get a revocable trust in just a few minutes?
Revocable Trust Basics Explained
If you intend to legally bequeath your inheritance to your beloved ones, there are two popular options for you — trusts and wills. Trusts are generally of two types: revocable or irrevocable. Both trusts can either be entered jointly by you and your spouse or individually.
Both are actively enforced while you are alive, but only a revocable trust is flexible and can be changed multiple times before you pass away. This is not so with irrevocable trusts since it becomes unchangeable once legally registered.
A will, on the other hand, is active only at the point where the testator — the person who sets up the will — is no more.
Will Versus Trusts
See other ways a will and a trust compare in this table:
|A will...||A trust...|
|Becomes active at the death of the owner||Becomes active while the owner is still alive|
|Is open for public accessibility||Is privately shielded from public knowledge|
|Involves the use of probate||Has no need for probate|
|Prone to legal contestation||Less likely to be legally contested|
|Involves the payment of taxes by the testator||May not involve tax payment by the grantor if it is an irrevocable trust|
|Can't be used to shield estates from nursing home charges||Can be used to shield estates from nursing home charges|
How to Set Up a Revocable Trust
Here are the seven easy steps to setting up a living trust.
Choose your beneficiaries
The whole essence of trust is making sure your beneficiaries get what you want them to. You need to first identify those beneficiaries. They could be your children, spouse or anyone!
Select a trustee
This is the one person, or group of persons, who pledges to execute your trust as you have instructed when you are no more. You have the option to name a first, second, and even third trustee in the event of uncertainties.
Define what assets go into the trust
Another important part of a trust is listing what you intend to bequeath. A revocable trust makes it easier for you to add or remove items from the list as you go.
Fill up revocable trust forms
You can get generic revocable trust forms from the internet, consult an attorney or use DoNotPay which helps you set up a standard trust in minutes. If you are looking for a less expensive, quality trust then DoNotPay works best for you.
Notarize trust document
Notarization gives your document legal credibility. It is always good practice to notarize your document in the state you have most of your properties situated.
Revocable Trusts and EIN
You are only required to have a separate EIN or TIN for the trust once you pass away. In the meantime, you can either choose to use your Social Security Number (SSN) or the nine-digit Employer Identification Number (EIN) also known as taxpayer ID for the trust. An EIN issued by the office of the Internal Revenue Service (IRS) to all employers within the US for the purpose of tax remuneration.
Since revocable trusts are subject to change and remain under the control of the grantor, they are fundamentally tied to the grantor in the eyes of the law. This means that the IRS requires the grantor, who is believed to be an American tax-paying resident, to bear the burden of whatever tax implication that accrues, hence the need for an SSN or an EIN.
The revocable trust maintains whichever of the two numbers provided by its owner until their demise. At that point, the trust loses its revocable status and the assigned trustee is then required to obtain a new EIN for it. Some people prefer to get a new EIN for their trust ready and handy from the get-go to avoid cumbersome processes upon their demise.
Getting Your EIN
You can obtain a new EIN in minutes from the IRS provided you have all the required documents handy. Other ways are:
- Through fax: this takes up to a week to complete and requires you to receive your EIN through the same fax channel you sent your form.
- Through the mail: this takes a couple of weeks and requires you to receive your EIN through the same sender's address after manually filing and mailing the form.
How to Get a Revocable Trust from DoNotPay - Fast
- Create a DoNotPay account and create a new Revocable Living Trust task
- Enter the state you reside in and plan to get the trust notarized
- Provide us details about your trustees
- Assign your beneficiaries
- Tell us which assets will be managed by the living trust
After that, a revocable living trust will be created containing all of the provisions you set.
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