A trust is an arrangement through which trustees take title to property for the
purpose of protecting or conserving it for the beneficiaries under the ordinary rules
applied in chancery or probate courts. A trust is a legal entity created under state
law and taxed under federal law. A trust may be created during an individual’s
lifetime (inter vivos) or at the time of his or her death under a will (testamentary).
Trusts include guardianships, custodianships, conservatorships, receiverships,
escrow accounts, Ginnie Mae (GNMA) and Fannie Mae (FNMA) pools.
Other Terms:
Fiduciary/Trustee: A fiduciary is an individual or organization charged with the
duty to act for the benefit of another. A trustee is a fiduciary. The trustee obtains
legal title to the trust assets and is required to administer the trust on behalf of the
beneficiaries according to the express terms and provisions of the trust agreement.
Beneficiary: A beneficiary is a person designated as a recipient of funds or other
property under a trust or an estate.
Grantor: The grantor (also known as trustor, settlor, or creator) is the creator of the
trust relationship and is generally the owner of the assets initially contributed to the
trust. The grantor generally establishes, in the trust instrument, the terms and provisions
of the trust relationship between the grantor, the trustee, and the beneficiary.
The grantor may retain control over all or a portion of the trust, which may result in
the grantor being subject to tax on the income from that portion of the trust.
Revocable/Irrevocable Trust: An irrevocable trust is a trust, which, by its terms,
cannot be modified, amended, or revoked. For tax purposes, an irrevocable trust can
be treated as a simple, complex, or grantor trust, depending on the powers listed in
the trust instrument. A revocable trust may be revoked and is considered a grantor
trust (IRC § 676). State law and the trust instrument establish whether a trust is
revocable or irrevocable. If the trust instrument is silent on revocability, then most
states consider the trust revocable.
Living Trust: A living person creates an inter vivos trust during that person’s lifetime.
An inter vivos trust can be established as revocable or irrevocable. An
inter vivos trust can be a simple, complex, or grantor trust depending on the trust
instrument.
Testamentary Trust: A testamentary trust is created by a will, which begins its existence
upon the death of the person making the will, when property is transferred
from the decedent’s estate. Testamentary trusts are generally simple or complex
trusts. A testamentary trust is irrevocable by definition, as it comes into being at the
death of the grantor. A “trust under the will’ is the same as a testamentary trust.
Conservatorship: A trust, not an estate, which is usually set up for an incompetent
person.
Guardianship/Custodianship: A trust usually set up for a minor.
Apply for Tax ID Number for Trust >
PLEASE NOTE: A Tax ID Number and an EIN Number are exactly the same. There are many different terms used by many different people but all of them represent the same thing.
All of the following are the same:
- Tax Id Number
- Federal Tax Id Number
- Federal Tax Identification Number
- Employer Identification Number
- Federal Employer Identification Number
- EIN Number
- FEIN Number
Apply for Tax ID Number for Trust
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Businesses that Need a Tax ID Number:
- Sole Proprietor / Individual
- Partnership
- Limited Liability Company (LLC)
- Corporation
- S-Corporation
- Personal Service Corporation
- Church Controlled Organization
- Non-profit Organization
- 501(c)(3)
- Trusts
- Estate of a Deceased Individual
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