The Listen to Lawrence Letter: Timing is Everything…

READER QUESTION:

If the special needs trust isn’t funded yet, and will only be funded when the parents pass away, and life insurance policy proceeds are received by the trust as the beneficiary of the policy, is a unique tax ID number for the trust needed now? Or is it OK/common for the trust to indicate that the tax ID number is obtained once it’s funded?

MY RESPONSE:

A baby doesn’t need a Social Security number when she’s born. She needs it when she actually has money and needs a bank account.

Same idea with a trust.

The trust can exist on paper, but it doesn’t need a tax ID number until it actually has money and needs to open an account.

If the trust isn’t funded yet, you don’t need the tax ID number yet.

You can get it earlier. It just doesn’t do anything for you yet.

The bigger question is making sure the trust itself is properly drafted now, so it’s ready to do its job when the time comes.

Got it?

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