A trust is an agreement where a person or a trustee holds the property as it were the owner for benefit of said beneficiaries. By placing the property in a trust, several things can be achieved, including immunity from estate taxes. By doing this you can also avoid paying probate, which will help save money and in addition time due to an untimely death. Initially, a trust has three major parts.
- Interest earned by the principal
- Any profits earned by the interest earned (capital gains)
The rules and stipulations established by the grantor, the one who sets up the trust, will be the deciding factor on who receives any money, capital gains, and any other assets. Another benefit of a trust is having more control over money and assets, privacy, and protection of legacy since the assets can pass outside public probate. When you create a trust, you must get a tax identification number. IRS-EIN-Tax-ID is a website where you can apply for and learn how to get a tax ID for a trust.
Unlike tax ID for an estate, which you have to have, there are two types of trusts and only one requires an EIN. A revocable trust uses the grantor’s social security number and may be changed or altered at any time by the grantor. An irrevocable trust requires an EIN number and can not be changed or altered after being created.
To set up a tax ID for a trust using the IRS-EIN-Tax-ID website, you will choose your entity, enter your information, and review and submit. You will receive your EIN number via email that same day if submitted during business hours. It is important to make sure you enter your information correctly to ensure that your application will not be rejected.