HomeFAQ'sDo I need a EIN for my Revocable Living Trust?

Do I need a EIN for my Revocable Living Trust?

Trust accounts serve the purpose of transferring wealth from a grantor to a beneficiary, and there are various types of trusts, each with its own tax ID requirements.

In the case of a revocable, living trust, it remains under the control of the grantor, and as a result, it does not require its own tax ID. Instead, it uses the grantor’s tax ID.

Conversely, with an irrevocable trust, it no longer falls under the direct authority of the grantor. The grantor lacks the ability to make alterations to the trust without the beneficiaries’ consent. Consequently, irrevocable trusts necessitate their own EIN since they function as distinct entities separate from the grantor.

Even in the case of a revocable trust, there may come a time when an EIN becomes necessary. This occurs when the grantor passes away, and the revocable trust transitions into an irrevocable trust, at which point it requires its own EIN.

It’s important to note that the tax treatment of trust funds can vary depending on their formation, with some trusts being taxed under their own EIN and others being taxed to the beneficiary. This tax treatment is contingent on the specific structure of the trust.

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What is a Trust?

A Living Trust is a financial tool that lets you plan, organize, and protect your life. It’s a personal entity that allows you to add assets and plan out your inheritance. Eliminating legal battles, cost, and time spent by your loved ones. 

Think of it like a personal LLC that you put everything you own in. Except it doesn’t protect you from liability like an LLC does, it protects you from probate and conservatorship. 

Probate is the complicated court process (12-18 months) where a judge decides what happens to your assets after you die, become incapacitated, or are “deemed” incapable. Creating a living trust allows your assets to completely circumvent probate and immediately transfer to your loved ones. 

In addition to being able to name heirs (your beneficiaries), a Trust also allows you to assign someone to manage it (your successor trustee). Instead of going through probate, your Successor Trustee takes control of the Trust, handles your affairs, and distributes your assets according to your instructions. The person you select as Successor Trustee should be your most trusted person. Like a best friend or closest family member.

At Dynasty, we believe everyone should have a Living Trust. If you have children, assets, or plan to acquire assets in the future, you should create a Trust. That way when you buy your next home, open a bank or brokerage account, get startup shares, etc. – you can immediately title them in your trust.