.png)
If you're fortunate enough to amass wealth and assets that you'd like to pass on to your beneficiaries, you've likely considered setting up a trust for your inheritors. A trust is an entity that holds your assets and eventually transfers them to your beneficiaries, allowing your assets to bypass the probate process. This can make the transfer of wealth quicker and simpler in most cases.
Ready to set up your trust but not sure if you need an EIN? Having an EIN all depends on the type of trust you choose, so let's walk through each step and find out if you need an EIN for your trust and how to get it.
What Is an EIN for a Trust?
First, let's define an EIN. An EIN, or Employer Identification Number, is a nine-digit code — much like a Social Security number — used to identify a business or entity to the IRS. But what exactly is the difference between an EIN and SSN? We often talk about EINs as they relate to small businesses, especially those that hire employees. But an EIN can be used for other legal entities, like trusts.
Here's how a trust works:
- A grantor or trustor — the person with the assets and wealth they wish to transfer — sets up a trust.
- The grantor names a trustee, a holding party that stewards the assets until the time of transfer.
- The trustee manages the trust, including filing and paying appropriate taxes on funds and assets.
- At the time of transfer, the trustee manages the process of distribution to the named beneficiaries.
If you're preparing to set up a trust, you might require an EIN ... or you might not. However, do not wait until it's too late to find out if you need an EIN for your trust — lacking a required EIN can impact how your beneficiaries can access trust funds down the line. Read on to learn more about EIN trust requirements.
EIN Requirements for a Trust
Do you need an EIN for your trust right away? The answer depends on the type of trust you form, and there are two overarching categories:
Revocable Trust
A revocable trust is often called a "living trust," which essentially means that the grantor is still living and can change or revoke the terms of the trust at any time.
Is an EIN required for a revocable trust? Not always. With a revocable trust, the grantor can file taxes on their own return using a Social Security number. However, an EIN is often requested by a bank or financial institution helping to set up the trust, regardless of trust type.
Word of warning: If the grantor of a revocable trust dies, it becomes an irrevocable trust. If the grantor had not previously acquired an EIN, the beneficiaries would need to do so before the trust funds could be released.
Irrevocable Trust
An irrevocable trust happens automatically when the grantor of a revocable trust dies, but it can also be started by a living grantor. In an irrevocable trust, the grantor surrenders all ownership rights to the wealth and assets controlled by the trust. Changes cannot be made unless all beneficiaries agree.
Is an EIN required for an irrevocable trust? Yes, an EIN is required to set up an irrevocable trust, so you'll need to acquire one at the start.
Caution: As mentioned above, a revocable trust becomes irrevocable upon the grantor's death. That means if no EIN exists, the estate — trustee, beneficiaries, or executor — must go through the process of acquiring one. Secure your EIN ahead of time to ensure your beneficiaries can access trust funds with no timely obstacles.
Reasons to Consider Getting an EIN for Your Trust
We strongly advise getting an EIN for your trust — even if your trust does not require it — sooner rather than later.
Here's why you might want to secure an EIN for a trust:
- You're planning to form an irrevocable trust.
- You're setting up a revocable trust but don't want to use your Social Security number to file taxes for it.
- You don't want your beneficiaries to deal with the hassle or delay of obtaining an EIN if you pass away before switching to an irrevocable trust.
- Your bank requests an EIN for your revocable trust.
- You want to be prepared for unforeseen circumstances rather than making decisions in stressful situations.
Getting an EIN takes some time and planning, but having it now — even if it's not required — can save you and your beneficiaries headaches and heartaches down the road. So, let's talk about the process.
How to Get an EIN for a Trust
If you decide to get an EIN for your trust, you must understand each of the following steps to acquire one. It can help to talk to a financial advisor, attorney, or estate planner, but we've got all the basics you need to get the conversation started.
Determine the Type of Trust
Figure out which type of trust you want to start. An irrevocable trust will require an EIN. If you're planning to start a revocable trust, an EIN is not required, but the IRS still highly recommends acquiring one. Why? An EIN for a trust can simplify the tax process and make things easier on your beneficiaries should an unexpected event occurs that changes the revocable trust into an irrevocable one.
Gather Your Information
To get an EIN, you'll need to know who the trustee will be and their Social Security number. This person will be listed as the responsible party and will be the one who actually utilizes the EIN when filing taxes, both before and after the passing of the grantor.
Decide How to Apply
There are several ways to apply for an EIN for a trust:
Apply Online With the IRS
You can apply online by completing the form on the IRS website. The process is free, but not only does it take longer to obtain your EIN this way, there are a few other things to keep in mind:
- You must complete the entire process in one sitting.
- Your session will time out after 15 minutes of inactivity.
- If you time out, you will not be allowed to reapply until the next day.
- You must fill out form SS-4 completely and accurately.
- If your EIN gets lost, the process to request it again can be tedious.
- You must apply during IRS business hours, Monday through Friday, from 7:00 a.m. - 10:00 p.m. ET.
Apply by Mail With the IRS
If you do not wish to apply online, you can mail IRS Form SS-4 to the following address:
Internal Revenue Service Center
Attn: EIN Operation
Cincinnati, OH 45999
Keep in mind that if you mail your application, it will take four to six weeks to receive your EIN. You can also fax the application to:
(859) 669-5760
If you submit by fax and can receive your EIN by fax, it will take around four business days.
Apply With a Third-Party Service Provider
So, what do you do if you need help completing your EIN application, or what if you need an EIN as soon as possible? To ensure your form is completed quickly and accurately, you can go with a third-party EIN service provider.
A provider will secure your EIN and deliver it directly to you, often within one business day. This saves you time, ensures your EIN application is filled out correctly, and typically keeps your EIN stored for digital access.
Keep Your EIN Stored Securely
Speaking of storage, make sure that you, your trustee, and your beneficiaries have access to your EIN whenever it's needed.
Your EIN should be stored somewhere easily accessible yet extremely secure, as it contains sensitive, private information. If you apply online through the IRS, you can immediately print out your EIN, but if you lose it, you'll have to go through the process of recovering it by mail.
Instead, consider a third-party provider, which will typically store your EIN in a secure digital dashboard. This provides you, your trustee, and your beneficiaries access to your EIN at any time, from anywhere in the world.
Frequently Asked Questions About EINs for Trusts
Still have questions about securing an EIN for your trust? We've got answers:
What Does EIN Mean for a Trust?
An EIN for a trust is the same as an EIN for any other legal entity — it's a way for the IRS to identify you. While it's commonly used for businesses that employ workers, it can also be used by other entities like trusts, nonprofits, churches, and more. EINs are used for tax filing purposes, so any entity or organization that needs to file taxes may require an EIN.
What Is the Format of a Trust EIN?
Like all other EINs, a trust EIN comes in the form of a nine-digit number, very similar to a Social Security number. That number is then used by the EIN holder as identification to the IRS during tax filing.
Is the EIN for a Trust and Estate the Same?
Yes, an EIN for a trust and an estate — or any other legal entity — is the same. Their EINs will come in the same nine-digit format and will be used for the same purpose: identifying the entity to the IRS.
How Long Does It Take to Get an EIN for a Trust?
How long it takes to get an EIN for your trust depends on how you apply for it. If you apply online with the IRS, you'll receive your EIN as soon as possible — as long as you complete the application during IRS business hours in one sitting. By fax, it will take around four business days, and by mail, it could be four to six weeks. The timeline if you use a third-party service provider will vary. With Incfile's EIN service, for example, you should have your EIN returned to you within one business day.
No one wants to think of life going on without them, but if you've had the opportunity to grow your wealth and wish to pass it on via a trust to support your loved ones or other endeavors, it's essential to start planning well in advance. Ensure that your assets are handled appropriately now and in the future by securing an EIN for your trust today.
Wendi Williams
Wendi is a freelance writer based in Indianapolis, IN, with over a decade of experience writing for a variety of industries from healthcare to manufacturing to nonprofit. When she isn't working on solutions for her clients, she can be found spending time with her kids and husband, working in the garden or doing more writing (of the fiction variety).
