Question: When filing for an EIN after the death of the creator of a revocable trust does the name of the trust change from revocable to irrevocable?
Background: I am the trustee of a trust. The trust was created as a revocable trust, but the person who created the trust (also known as the “grantor” of the trust) and named me as trustee recently passed away, so the trust has become irrevocable. The trust needs an EIN (Employer Identification Number) for tax purposes. What name do I use for the trust? And what else should I be aware of?
Answer from Loraine: The name of a revocable trust does not change just because the trust’s status as irrevocable or revocable changes. When you apply for an EIN for the trust, you should use the same name that the trust was given when it was created. However, you need to be sure that you indicate on the EIN application form that the type of trust is irrevocable.
For example, if the trust was originally named “The XYZ Revocable Trust,” you would apply for the EIN using the name “The XYZ Revocable Trust” (in the IRS’s files, this will generally be abbreviated to “XYZ Revoc Tr”). The EIN application will ask for the trust’s “responsible party”: this will be the trust’s grantor, even though the grantor is now deceased. In the section that asks what type of trust the EIN is for, you will respond “irrevocable,” because the trust actually became irrevocable at the grantor’s death. The trustee will be the person that is serving at the time the EIN is applied for. For a revocable trust, in many cases that will be the trustee that was nominated to succeed the grantor at the grantor’s death or incapacity, because the grantor is usually the original trustee of a revocable trust.
You can apply for an EIN online via the IRS’s EIN assistant, which can be found at https://sa.www4.irs.gov/modiein/individual/index.jsp
Please note, however, if you apply for an EIN online yourself, without having an attorney or accountant obtain it for you, beware: There are companies that have set up shell websites. These shell websites will take you to the IRS’s website and let you use the EIN application. However, they will charge you for that. Applying for an EIN at www.irs.gov is absolutely free, and if you are ever asked by a website to pay to obtain an EIN, you should immediately get away from that website and do NOT provide them with any additional information.
A word of further caution: If you are a trustee dealing with a formerly revocable trust that is now an irrevocable trust, you should have an experienced trust attorney help you with the administration. The Avvo Q&A forum is good for general legal answers, however it is not designed to provide you with actual legal advice about any given situation, and you should not rely on an answer you receive here in making decisions about a real situation. An attorney can help you avoid pitfalls in the trust administration process, in addition to answering questions like this one. For example, it may be desirable to have the grantor’s estate make an election under IRC Section 645, which can reduce the number of separate income tax returns needed by allowing the revocable trust to be treated as if it were part of the estate for income tax purposes for a number of years, instead of having the trust and the estate remain separate taxpayers. The attorney can also let you know that the decedent’s estate and trust need separate EINs, even if the Section 645 election will be made, help you understand the overall probate and administration process, and advise you on how to pay creditors and make distributions when the time comes.
Key Estate Planning Takeaway: Trust administration is a complex task and most nonlawyers will benefit from having an experienced trust attorney guide them through it.
For more information about administrating an RLT after death, please visit: What is Trust Administration?
This “Q&A with Loraine” blog series features answers from Morgan + DiSalvo Partner Loraine DiSalvo to questions posted on www.avvo.com. This answer is pulled directly from Loraine’s response on Avvo. Key takeaway from each exchange highlights an important facet of estate planning.
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