Do You Need an EIN to Open a Trust Bank Account?
“The bank says I need to go get an EIN to put my accounts into my trust. Is that true? What is an EIN?”
One of the most common reasons our clients call us is to ask us what their bank is telling them to do in plain English, especially when it comes to putting their accounts into their trust. A common occurrence is when a bank teller tells our clients that they can no longer use their social security numbers on their bank accounts if they put the account under the name of their trust.
The short explanation is no, you can still use your personal SSN on a bank account under the name of your revocable living trust, just as you would an account under your name individually.
If you would like to know more details, we’ll start with what is an EIN or a TIN. These are numbers, assigned by the IRS, to entities for tax reporting reasons. An EIN means Employer Identification Number and TIN means Tax Identification Number. Sometimes they are referred to as Federal Tax ID numbers. Before your eyes glaze over, all you need to know is that the process for acquiring each is the same so, in essence, they are all the same thing to the taxpayer. Thus, when we refer to an EIN or TIN or Federal Tax ID, we mean the same thing.
Regarding using an EIN to open a bank account rather than your SSN, that is good advice, in the case of an irrevocable trust, rather than a revocable one. For example, if you were to open an account for an irrevocable trust (such as a Special Needs Trust), then the Trustee would apply for and receive an EIN from the IRS so that an account can be opened. However, if your trust is revocable (well drafted trusts will plainly state this in the body of the document), the IRS specifically does not want to issue an EIN to a revocable living trust when the trustor (maker of the trust) is, or trustors are, still living. Trustors are also known as Grantors.
Thus, in the case of an individual with a trust opening a bank account under their trust, they may still use their own SSN. If the trust has multiple trustors (such as a married couple), either party’s SSN may be used to open the account. The trust is still you and the assets are still yours. This is simply a new way by which you hold your assets.
The above is confirmed here, which is a third-party designee to assist people with obtaining an EIN:
"A revocable living trust does not typically need its own Tax Identification Number (TIN) while the grantor is still alive. Instead, the grantor’s social security number is used for tax purposes. For example, if someone establishes a living trust and then opens an investment account under the name of the trust, the account will use the grantor’s social security number while the grantor is alive."
Please note that as that is a third-party designee, we do not recommend the above website be used for obtaining an EIN. For safety and security, only use the IRS’s own online system, located here, should you need to obtain an EIN. Sensitive information will need to be provided to the IRS in order to be assigned an EIN.
In summary, if your trust is revocable, there is no need to acquire an EIN in order to open or transfer an existing bank account into the name of your trust. If you do need an EIN for an irrevocable trust, then one may be acquired online, through the IRS, for free.
If you have any questions regarding revocable or irrevocable trusts, or would like more information about the process of applying for an EIN from the IRS, please feel free to contact us here or call us at 909-307-6282.