A standard revocable grantor trust is an entity where the owner of the trust, the grantor, transfers property to trust and retains control of the trust. A revocable grantor trust typically uses the Social Security number of the grantor as the trust tax identification number. When the grantor dies, the trustee applies to the Internal Revenue Service for a new tax identification number for after death trust tax reporting.
Earnings Prior to Date of Death
Any trust earnings prior to the grantor's date of death report under the grantor Social Security number for completion of the final grantor trust tax Form 1041. This filing is for used in completing the grantor's final personal income tax return Form 1040. The after death portion of the grantor trust earnings have separate reporting requirements, which means the trust will file a different Form 1041 beginning at the date of death of the grantor.
After Death Earnings
Upon the death of any person, the funeral home reports the Social security number of the deceased to the Social Security Administration. Ongoing tax reporting for the trust cannot use the social security of the grantor, since payment of any tax due on the trust earnings after death is from different parties. For example, if the trust terminates outright upon the death of the grantor, the tax attributable to earnings after death will pass out to the recipients of the trust property. Any new trust established under the terms of the grantor trust agreement will have earnings after death reported to the new trust for appropriate tax treatment.
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Trust and Estate
If an estate is required to be opened, the estate will also have a separate tax identification number that is different from the after death grantor trust. In some cases, the personal representative of the estate may be able to elect to combine and treat the after death portion of the trust and the estate as one entity for tax purposes. This Internal Revenue Service refers to this as a 645 election. Visit the Internal Revenue Service website for more information on 645 elections under the instructions for filing Form 1041 (see "Resources").
Obtaining a New Tax Identification Number
The Internal Revenue Service has simplified the process for trustees and personal representatives to obtain new tax identification numbers for deceased grantors and estates. The application is on the Internal Revenue Service website, and, after going through the application, the website instantly generates the information letter granting the new tax identification number for the trust. Trust and estate tax filings are complicated since tax law changes frequently, so it is always prudent to seek the advice of a professional tax lawyer or CPA prior to filing any returns with the Internal Revenue Service.