Estate planning means arranging, during lifetime, the disposal of your assets, after you are dead. It allows you to make sure your heirs get a correct arrangement and it’s also a great tool to skip some taxes.
There are many legal tools that allow for this, the best known are wills and trusts.
A trust can be used to either give your offspring a correct asset allocation, to help a disabled child, to correct a reckless spending behavior, to support the young during college and so on.
There are two types of trusts: revocable and irrevocable trusts.
When it comes to an irrevocable trust, once you have put a property into the trust (money, real estate etc.), you cannot change your mind later and remove said property from the trust. It’s not yours anymore, it belongs to the trust.
A revocable trust, as you have guessed, means you can change your mind at a later date, remove the property from the trust and terminating it (the trust, not the property, I hope :)).
With a revocable trust, you do not need an employer identification number, just your social security number.
A lot of people chose to create a revocable trust, also known as living trust, for their belongings to be managed after their death. By placing assets in a trust, you can achieve immunity from taxes and it is possible to avoid probate.
To create an irrevocable trust, you’ll need to apply for an EIN.
How to get an EIN for a trust? To do so you can use the website IRS-EIN-Tax-ID.com where they have broken down the sometimes confusing and stressful process into three simple steps.
- Select your trust type
- Enter your trust information
- Review and submit paperwork online
When selecting your entity, you would select trust and then begin to enter your information.
It is important that you enter your information correctly because if not, your application will be rejected, and you will need to start over.
To avoid this, they have agents that will help with the process to ensure that the information is correct, and the filing process goes smoothly.
These are just few steps to get your settled for the future.
Should you choose an irrevocable trust for your estate planning, getting an EIN is a very simple process and it will make it all easier for your heirs afterwards.
One of the reasons for this requirement is that while the grantor is alive, the trust is revocable. When the grantor dies, the trust becomes irrevocable and is treated as a separate entity.The trustee must file a separate income tax return using the Employer Identification Number (EIN) furnished by the IRS to pay for the trust’s taxes.Once the new EIN is obtained, that number must replace the grantor’s social security number on all of the accounts titled in the name of the trust.
