The Listen to Lawrence Letter: Revocable Trusts and Tax ID numbers

CLIENT QUESTION:

I am transferring assets into my and my wife’s separate revocable trusts. Do I need to obtain a new Tax ID# for each trust?

MY RESPONSE:

Absolutely not!  The IRS doesn’t want to know about your revocable trust! Why, you ask? Because you haven’t really done anything they care about. Let’s break it down.

You transferred your assets (under your Social Security number) to a trust that you are totally in control of, and can get rid of it (revoke it) and take your property back whenever you want. What have you really done? Absolutely nothing? You effectively transferred your assets from your left hand to your right hand. The assets in the trust are still YOUR assets, so the IRS ignores your trust, like it does not exist. The trust should just continue to use your own Social Security number, and the trust does not have to file a tax return. You will be issued a 1099 on all trust accounts, and you will report the income on your personal 1040 return.

The legalese description of this is that the trust is subject to the Grantor Trust rules…but now I am just being a show off. 😊

And, if anyone you know would like to

receive this Listen to Lawrence Letter just

tell them to send their email address to info@davidowlaw.com and I’ll add them to the list!

As always, please send your questions in! If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected. Stay safe!