Probate ~ 12 Questions To Know When Getting a Tax ID Number for a Trust or Estate

Losing a family member or someone close to you is an emotional time and one that may also come with fiduciary responsibilities. If you are left handling the financial affairs of an estate or trust in Maryland, Virginia, or Washington, D.C., you may be tasked with applying for a taxpayer identification number from the federal government. It may come as a surprise, but you cannot use your deceased loved one’s Social Security number. And, you cannot use your own unless you inherited everything as a surviving spouse or through a revocable living trust.

Known as the employer identification number (EIN), it functions similar to a Social Security number. With an EIN, you can open bank accounts, and conduct reportable business transactions. Although the process has been streamlined on the government’s www.irs.govwebsite, you may want to prepare to answer the following questions.

1. What Type of Organization?

If you are securing the EIN for probate estate purposes in Maryland, Virginia, or Washington, D.C., select “estate.” If you are the administrator of a trust, select “trust.”

2. What Type of Trust?

If you are applying following the death of a loved one, choose “irrevocable.”

3. Name of Responsible Executor or Trustee?

Enter the name and Social Security number of the living person who will be tasked with paying any taxes.

4. Name of Executor?

This question applies only to estate EIN applications. Enter the person named as executor in the Will.

5. Do You Want to Make a 645 Election?

This question is about the time period you prefer when filing taxes. Trusts do not necessarily follow the same calendar year. For instance, you could select to pay taxes based on the 12 months after your loved one passes. You also have the option of choosing Dec. 31 and following the usual calendar year.

It’s not uncommon to work with the 12 months option following a death in cases where the trust is not expected to run more than two years. In such cases, consider selecting “Yes” and make a 645 election, Otherwise, do nothing and the tax period will end Dec. 31 by default.

Accountants have differing opinions about which option is more beneficial. It may be prudent to check with yours before proceeding.

6. Who is the Trustee of Irrevocable Trust/Name of Executor?

As mentioned previously, this will be the person responsible for paying the taxes and managing any assets.

7. Are You a Designated Third Party Designee?

The online resource is basically asking if the person making the EIN application is the executor or trustee. Whoever fills out the electronic form must either be the responsible party or have permission to do so from the executor or trustee. If you have been granted permission, you must have an authorization letter and signature of the responsible party on an SS-4 form. It’s a crime to click “yes” without legal authorization.

8. What is the Fiduciary Title?

The online assistant will offer the following three choices.

  • Administrator: This is the court-appointed person overseeing an estate.
  • Executor: The person listed in the Will and approved by the probate court.
  • Personal Representative: In small estates, this person is listed in a Will that does not require probate court oversight.

9. Date Trust Funded and Closing Month of Accounting Year?

The IRS is seeking the date the person passed away. The closing month will be the end date of the tax period you selected. Either 12 months after the death (645 Election), or Dec. 31.

10. Dates Estate Created and Closing Month of Accounting Year?

If you are securing an EIN for an estate, enter the date the person died. For the closing month, enter the same month.

11. Do you Expect Employees within 12 Months?

Generally, the answer is “No.”

12. Review the Info and Submit.

After you have entered all of the information, the IRS’ online assistant provides a summary. Take a moment to review the information and be certain everything is correct. If not, make any necessary changes. Once the information is complete and accurately entered, click “Submit” and receive your EIN promptly.

Although the IRS’ online assistant remains the most efficient way to obtain an EIN, people in Maryland, Virginia, and Washington, D.C., can utilize the following fax number (859) 669-5760 as well.

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