It's important to have this for filing tax returns. Revocable trusts don't necessarily require an EIN, since you can use the grantor's social security number, yours if you created the trust, if you so choose. However, the IRS recommends that both revocable and irrevocable trusts have their own tax identification number (EIN). Yes, a revocable trust needs a tax ID.
But you don't need your own tax ID. A revocable trust uses its grantor's social security number as a tax identification. The grantor will deposit assets in the revocable trust and your social security number will be used for tax purposes. The grantor is still responsible for the taxes invoked by the revocable trust, but it also has full control over the terms of the trust and when it is dissolved.
A revocable active trust normally doesn't need its own TIN (tax identification number) while the grantor is alive. Many trusts need a federal tax identification number called an employer identification number (EIN), but revocable living trusts DO NOT need this number. Wondering why you don't need an EIN for an active trust? Do you want to know if you will ever need an EIN for a revocable trust in the future? Here's What You Need to Know. As long as you live, your revocable living trust doesn't have a different tax identification number (TIN) or EIN and you don't need to file a separate trust tax return. Unlike irrevocable trusts, a revocable trust will not use its own separate EIN as tax identification.
Some irrevocable life trusts are also grantor trusts and, therefore, are taxed to the grantor just like a revocable trust. Lifetime or revocable trusts offer you the opportunity to transfer assets to your heirs after your death, without having to go through a probate process, and that can streamline the inheritance process and minimize legal costs for your heirs. During your life, your trust is revocable and you, the grantor, pay the trust's property taxes. While the trust exists as a separate entity from the grantor or the grantors that created it, the trust's revenues are transferred directly to the grantors. During the grantor's life, the trust is revocable and the grantor pays taxes as an individual, using the grantor's SSN (social security number).However, upon the death of the trust grantor, the revocable living trust instantly becomes an irrevocable trust, and that will require an EIN to perform actions such as accessing trust funds, etc.
The different types of living trusts can help you avoid probate legalization, reduce estate taxes, or establish long-term property management. At that point, the trust requires an EIN, since the trust can no longer be associated with the deceased grantor's social security number. The trust usually contains instructions about what should happen to the trust's assets after the grantor's death. You can be the trustee of your own living trust and maintain full control over all assets held in trust. For example, if you want to leave your home through the trust, you must sign a new deed showing that you are now the owner of the house as the trustee of your trust.
Couples who have a joint revocable trust have the power to revoke the trust; either person's social security number can be used. When the grantor dies, the active trust becomes irrevocable and the successor trustee will receive an EIN from the IRS to pay the trust's taxes.
