Sometimes Yes, Sometimes No
Sometimes it does, and sometimes it does not. The answer depends on what kind of trust or estate we are dealing with and what has happened to the person who created it. A revocable trust during your lifetime is usually handled differently from that same trust after your death. That distinction is why we do not want someone applying for a new tax ID number simply because a bank employee asked whether the trust has one.
What an EIN Is
The number people are usually referring to is an employer identification number, or EIN. The name causes confusion because an estate or family trust may never employ anyone. An EIN is also used to identify certain trusts and estates for banking and tax reporting. It does not turn the trust into a business, and obtaining one does not automatically mean a tax bill is coming. It gives the institution or taxing authority a number under which to identify the arrangement.
During Your Lifetime
During your lifetime, a typical revocable living trust is treated as a grantor trust for federal income tax purposes. In an appropriate reporting arrangement, your Social Security number can be used, and the income is reported on your personal return. You do not necessarily need a separate EIN just because you signed and funded the trust. There are different permitted reporting methods, so we coordinate with your accountant rather than assuming every trust should be handled identically. The IRS instructions for Form SS-4 explain the exception available to certain grantor trusts.
After Death
After death, that treatment often changes. A revocable trust that becomes irrevocable generally needs its own EIN, and income earned after death must be handled under the applicable estate and trust reporting rules. A married couple’s trust can require a closer look because part may continue for the surviving spouse while another part becomes a separate trust. We need to read the document and identify what has actually changed. The IRS guidance on when a new EIN is required also makes clear that changing trustees alone does not require a new number.
The Probate Estate Needs Its Own Number
A probate estate is separate from the trust, even when the same person serves as personal representative and trustee. An estate generally needs an EIN to open its account and handle its reporting. You should not use the trust’s number for an estate account just because both are connected to the same deceased person. Nor should the personal representative use a personal Social Security number to make opening the account easier. The account needs to identify whose money is being held and in what capacity.
Income Tax Returns After Death
This is also different from the deceased person’s final personal income tax return. That return addresses the individual’s income through death. Income earned by the estate or trust afterward may require fiduciary income tax reporting, commonly on Form 1041. Whether a return is required depends on the applicable filing rules. None of this is the same as determining whether a Massachusetts estate tax return is required. A family can have estate or trust income tax obligations even when no estate tax is due. The IRS instructions for Form 1041 describe those filing requirements.
Apply Directly Through the IRS
Applying for an EIN directly through the IRS is free. There are websites that charge to obtain one, sometimes with names or appearances that make them look official. The application itself may be fairly quick, but the answers should reflect the correct entity, dates, and tax treatment. We prefer to resolve those questions first, particularly when several trusts may be created after a death. The official starting point is the IRS EIN application page.
An EIN Does Not Give You Authority
Keep the confirmation with the estate or trust records, because the bank and accountant may both need it. Also remember that an EIN does not appoint you as personal representative, establish that you are the trustee, or transfer an asset into the trust. Those require their own documentation. When we help with administration, we coordinate the number with the account ownership and the tax reporting so your family does not spend the following year untangling forms issued under the wrong name.
Start with a free 15-minute consult call with Nicole Ott, our Lead Intake Coordinator. Tell her who has died, whether there is a trust, and what the bank has asked for. That is usually enough for us to say what to do next.
