Introduction
Creating an irrevocable trust is a powerful estate planning strategy that separates assets from your personal estate. But many ask: do I need a tax ID number for an irrevocable trust? The answer is usually yes. Let’s explore why, when, and how to get one.
What Is an Irrevocable Trust?
An irrevocable trust is a legal arrangement where the grantor permanently transfers assets into the trust. Once established, the grantor cannot modify or dissolve the trust without the consent of the beneficiaries or a court.
This type of trust offers:
- Asset protection
- Estate tax reduction
- Medicaid planning benefits
But it also requires separate tax reporting.
Do I Need a Tax ID Number for an Irrevocable Trust?
In Most Cases — Yes
An irrevocable trust typically requires its own tax ID number, also known as an Employer Identification Number (EIN). That’s because the trust is considered a separate legal entity for tax purposes.
Exceptions
In rare cases, if the trust is a grantor trust and the grantor retains certain powers or benefits, the IRS may allow use of the grantor’s Social Security Number instead of a separate EIN.
However, this is more common with revocable trusts — irrevocable trusts almost always need a unique tax ID.
Why Does an Irrevocable Trust Need a Tax ID Number?
- To file federal tax returns (Form 1041)
- To open bank or investment accounts in the name of the trust
- To receive income from trust-held assets (e.g., rental income, dividends)
- To pay trust-level income taxes
How to Get a Tax ID Number for an Irrevocable Trust
Here’s how to apply:
- Visit the IRS EIN Application Portal:
Go to irs.gov. - Choose Entity Type:
Select “Trust” as your entity type. - Enter Trust Details:
Provide information about the grantor, trustee, and purpose of the trust. - Submit and Receive EIN:
You’ll receive your EIN immediately online or by mail if filing by paper.
Final Thoughts
So, do you need a tax ID number for an irrevocable trust? In almost all situations, yes. It’s required for filing taxes, managing trust income, and separating your personal identity from the trust.
