Welcome and Introduction
Michelle Dexter: Well, good afternoon everyone. My name is Michelle Dexter. For those of you who don’t know me, I’m excited to see a few faces that I recognize and a few new names that I’m not as familiar with. So, thank you all for joining me this afternoon—I guess we’re now into the afternoon.
00:06:36
Michelle Dexter: As I said, my name is Michelle Dexter. I’m an attorney here with Keystone Law Firm. I’ve been here going on almost nine years now. Francisco Sirvent, who’s the founder of Keystone Law Firm, and I have been trying to do some different webinars to kind of educate the community. Carmy Goodman is a financial advisor here as well, and he also does some webinars.
00:06:55
Michelle Dexter: So if you’re ever looking for information, you can check out our YouTube channel. If you search “Keystone Law Firm” on YouTube, you’ll find a lot of good videos on there that will hopefully help people find the information they’re looking for. Today’s topic is how to fill out the SS-4 form and obtain an EIN after a trustmaker dies.
00:07:17
Michelle Dexter: Keep in mind, while I am an attorney, this is not intended to give specific legal advice to any one of you. Everybody’s situation may be slightly different. This is a generally informational and educational-purposed webinar. So if you have something tricky that you’re dealing with, please reach out to a legal professional, whether you call our office or somebody else.
00:07:38
Determining the Need for an EIN
Michelle Dexter: Okay. So the first thing we want to evaluate is: do you even need an EIN? For those of you who have revocable living trusts, your Social Security number, as the trustmaker, serves as the tax identification number for your trust. We only need an EIN when we are replacing the trustmaker’s Social Security number for tax ID purposes because no trustmaker is alive.
00:08:02
Michelle Dexter: If you have an irrevocable trust, that may also require an EIN. We do those for long-term care planning. We might need an irrevocable Miller’s Trust, or we might need an irrevocable Special Needs Trust. Some of those different types of trusts may have their own EIN, and those would be appropriate times to get one.
00:08:23
Michelle Dexter: But if you have your own personal revocable living trust and you are still alive, you should not need an EIN for that trust. All right? So definitely don’t do it before the trustmakers are deceased if it is a revocable living trust.
I just want to clarify that when we are obtaining an EIN, we can apply for it online.
00:08:44
Required Documentation and Authorizations
Michelle Dexter: However, there are a couple of documents that I encourage you to review and have in place. If you are obtaining an EIN for something that you are in charge of or in control of, where your name is on it, you don’t need to have a separate authorization. But if you are doing it for somebody else—so for example, when our law firm gets hired by a trustee—the trust is now irrevocable because the trustmakers have passed away. When we are getting a new tax identification number or EIN, we will have the trustee sign a document authorizing us here at Keystone Law Firm to apply for that EIN.
00:09:05
Michelle Dexter: So, if you’re trying to help somebody else out, you need to make sure that you’re getting that authorization in writing, as that is something the IRS requires you to keep. We’ll talk about that when we go through the forms.
The SS-4 form is the form that you’ll want to be filling out. And again, if you’re doing this for a third party, you’re going to have them sign that form and you’re going to keep it.
00:09:58
Michelle Dexter: I think that filling out the SS-4 form, even if you’re doing it for yourself, is just a good way to make sure that you have all of the information you need regarding what the application is going to ask for.
There are also separate instructions for completing the SS-4. Now, the SS-4 and the instructions—though not the third-party authorization form itself—are available on the IRS website. So, if you go to IRS.gov, you can put “SS-4” in the search bar and those documents will come up.
Rachel’s got a question. Rachel, you’ll probably have to put that in the chat. There’s a little chat bar towards the bottom right. It looks like one of those cartoon speaker things, and you can add your question in there if you have one. All right.
00:10:44
Michelle Dexter: So, that SS-4 form is the one that you’re going to be looking to get.
Let me come back over here. As I mentioned, regarding the authorization to apply for the SS-4: if you’re applying for an EIN for a third party and not yourself, then you’re required to have written authorization from the person for whom you’re applying, authorizing you to act on their behalf. This is specifically asked for, and you’re required to keep a record of that. All right.
00:11:05
Navigating the SS-4 and IRS Instructions
Michelle Dexter: This is what the SS-4 form looks like. All right. And I realize it’s a little bit hard to see in this format. I’ve got screenshots of doing it online, but basically, as I mentioned, most of the required info is right here.
00:11:28
Michelle Dexter: This is the second page, and it does talk about whether you need an EIN and when the appropriate times are to get one. So again, there is good information on the IRS.gov website.
As I mentioned, the instructions are also there. This is just a partial screenshot of it. I will go into a little bit more detail regarding the “responsible party” when we get there. But if you’re looking for detailed information from the IRS itself on how to apply for this EIN and how to fill out the SS-4 form, there are specific directions on the IRS website. This is nice because it will identify things like, “If you’re filling out line number 7b, this is what you need to put in,” that type of thing.
00:12:06
The Online EIN Application
Michelle Dexter: Okay, moving on to the online application for the EIN. You will use the completed SS-4 form to fill out the online application. If you don’t have all that information ready, their system may time you out. Furthermore, if you have to go back to correct information, you may also have to start from the beginning again. So having all that information ready and knowing exactly what you’re going to do can be very helpful in that regard.
00:12:33
Michelle Dexter: Rachel’s question is: “If there’s a joint trust, is an EIN needed when both people die or just the second one?”
You need it when the second person passes. Okay? So when the first person passes, we’re using the survivor’s Social Security number as the tax ID number for the trust. But when the second trustmaker passes, that is when we need an EIN. Okay, good question. All right.
00:12:53
Michelle Dexter: So, let’s look at the online application process for applying for an employer identification number, also known as an EIN. Sometimes you’ll hear them referred to as a TIN, a tax identification number. They are generally the same thing. I think the term TIN tends to be used a bit more for certain business-related structures, but you can search “EIN” on their site, and it comes to this page. Down at the bottom, there is a blue button that says “Begin Application Now.” When you’re ready, that is what you’ll click to move forward.
00:13:30
Selecting the Legal Structure
Michelle Dexter: The first thing you’re going to do is identify what type of legal structure you are applying for. Okay, today we’re mostly talking about trusts. But understand that if you are opening up a probate, the “Estate” option is appropriate for probates, while the “Trust” option is appropriate for trust administration.
00:13:53
Michelle Dexter: As you can see, there is also sole proprietor, partnerships, corporations, limited liability companies, and some additional tax-exempt types listed there. But what we’re looking at today is doing the trust. Okay.
00:14:21
Michelle Dexter: When we click on “Trust,” it’s going to want us to identify the type of trust. In most cases, this happens when both of the trustmakers have passed away from a revocable living trust. Okay? So that’s basically the example we’re going to be using today. Right? You’ve got a revocable living trust. Both of the trustmakers have passed away. We now have to administer their trust for the benefit of the contingency beneficiaries, meaning we are now dealing with an irrevocable trust.
00:14:53
Michelle Dexter: Once both of the trustmakers are deceased, even though it was created as a revocable trust, it becomes irrevocable because neither of the trustmakers is able to make any changes to the terms of the trust anymore. Okay? So we go ahead and choose “Irrevocable Trust” there in that right-hand column. All right.
Once you choose that trust, a warning box pops up that says, “What is an irrevocable trust?” It confirms that the grantor has no control over the trust and that the trust will be responsible for reporting income. If you need to change your structure, this is the right time to change it because going forward, if you have to change anything, you might have to start all over again.
00:15:18
Identifying the Responsible Party and Trustee
Michelle Dexter: All right, next we’re going to tell them about the responsible party. The responsible party in a probate is the personal representative who has been appointed by the court.
00:15:43
Michelle Dexter: When it comes to a trust, here at Keystone, we typically use the trustmaker as the responsible party. I know that some law firms will use the trustee as the responsible party. The reason we do it our way is that when you go to the instructions on the IRS website regarding the responsible party, the first part says the responsible party is the person who ultimately owns or controls the entity, or who exercises ultimate effective control over the entity. That sounds like the trustee. But if you look at that second box about midway through, it says: “For trusts, the responsible party is a grantor, owner, or trustor.”
00:16:14
Michelle Dexter: So the trustmaker, in our case, is the grantor, the owner, or the trustor. Typically, when we are looking at identifying the responsible party, we use the trustmaker. That would be whoever was the second to pass if it was a married couple—it would be the second to pass. We’re putting in their name and their Social Security number tied to this.
00:16:40
Michelle Dexter: Next, it’s going to say: tell us about the trustee. That more than likely is going to be you, or the person who is going to be effectuating and administering the trust now that both trustmakers have passed away. Okay? So if that is your role, your name will go in there.
00:17:02
Michelle Dexter: You’ll see at the bottom of that section an option for your role: either you are the grantor, the trustee, or a beneficiary having a material interest, in which case you can do this without a third-party authorization. The second box says, “I am a third party applying for an EIN on behalf of the trust.” That is the option where, like us here at Keystone, we get authorization from the trustee to do this on their behalf.
00:17:26
Michelle Dexter: One thing you really want to make sure of when you are filling out this particular form—this whole IRS application—is that they don’t like any special characters. So, for example, if you would normally write your middle initial as “L.”, don’t put the period. If you’re entering your address as, you know, “2701 W. Queen Creek Road,” you don’t use the periods after the W or Road. It’s kind of interesting, but it will correct you if you do that. Just know as you’re going through: no special characters are allowed.
00:18:18
Michelle Dexter: If you indicate that you’re a third-party designee, it is going to ask you to verify that. It’s verifying whether you obtained authorization from the taxpayer and completed a signed SS-4 form. So, remember, that was one of those first forms that I showed you from the IRS website. You’re going to have an authorization signed and the SS-4 application signed as well. You need to have both of those documents, and you, as the third-party designee, are required to keep that documentation. So make sure that once you have the EIN, you don’t just throw it away. You actually need to hold onto that. Okay? If you’re a third-party designee, that applies. If you’re doing it for yourself, this does not apply. Okay.
00:19:02
Addressing and Naming the Trust
Michelle Dexter: Then come the addresses. What is the address for the irrevocable trust going to be at this point in time? Right? Even though the trustmaker is the responsible party, the address is usually going to be the trustee’s. Okay? We want this to be where we want the IRS to send information—where do we want anything related to the tax ID sent? So that generally is going to be the trustee’s contact information at that point in time. Okay? Street, city, state, zip code, what country you’re in, and a phone number.
00:19:22
Michelle Dexter: If you have a different US address than what’s above—so let’s say that this is the mailing address you’re using but you’ve got a different home address—you can put in the different address for that.
00:19:44
Michelle Dexter: Next, it’s going to say: tell us about the irrevocable trust. The legal name of the irrevocable trust is going to be put in there, keeping in mind: no special characters.
Then, the county where the irrevocable trust is located. You, as the trustee, may live out of state. But if the trust was done here in Maricopa County, and this is where the trustmakers lived and where the real property is, I’m putting that the county where the irrevocable trust is located is Maricopa County, Arizona. Okay? And so you can just say Maricopa. The next option is what state it is.
00:20:10
Michelle Dexter: Now, for the date the trust is funded. The trust has an original date in the name of the trust, which is the original date that the trustmakers first created the trust. Okay? However, the date that the irrevocable trust was funded is the date of death of the second trustmaker. Okay? And that’s really important because if you have a trust that’s, say, 20 years old and you try to use the date that the trust was originally created, the IRS system will reject it. Okay?
00:20:52
Michelle Dexter: I’m not sure how far past the limit is. I think we’ve got one case right now that hadn’t been administered in five years since the trustmaker died. We’re about to find out whether or not that EIN is going to be something we can populate through the online process, or if it’s something we’re going to have to send directly to the IRS via mail and wait a couple of months to get an EIN number. That really stinks.
00:21:13
Michelle Dexter: So for most of you, if you can get the EIN number within, you know, a few months of the second trustmaker dying—or the only trustmaker dying—that’s the best way to do it. You’re using the month and year that the person passed away as the date that the irrevocable trust was funded. Okay?
00:21:31
Michelle Dexter: There are times when there may be character limits for the legal name of the irrevocable trust, and you might have to abbreviate. In our certificates of trust, under the trust name, the next paragraph talks about how you can abbreviate the name of the trust a little bit and still have it be what they need for a legal determination. So, just know that you might have to abbreviate it a little bit, but you’re looking for the legal name of the trust, which is the original name of the trust—unless you’re creating sub-trusts or doing something fancy, which is a whole different conversation. For today’s purposes, again, we’re just converting that revocable trust into an irrevocable trust because both of the trustmakers have passed away.
00:22:13
Michelle Dexter: Okay. Then there at the bottom: “Do you expect to have any employees in the next 12 months?” Most trust administrations don’t have any employees, so that usually is not an issue. Okay? So use the county where the assets are or where the trustmaker last resided. Don’t use the original funding or the original date of the trust; use the date of death of the last trustmaker. Okay.
00:22:33
Reviewing and Finalizing the Application
Michelle Dexter: Now, when you get to this point, you’ve put in all the information, and it’s going to give you a summary. Down towards the bottom of this page is the summary information. That’s a good time for you to review everything and confirm that everything is accurate.
00:22:54
Michelle Dexter: It’s also important that you print that page, whether you’re just saving it as a PDF or printing it out. You want to make sure that you have a record of all the information you put into the system on file because you won’t ever necessarily get something again that provides you with all of that detailed information. Okay? They’ll provide you with the EIN, but they won’t provide you with a summary showing who you put in as the responsible party, what Social Security number you used, and those types of things. So, we definitely encourage you to print the summary of information before you click that next button to finalize and submit for the EIN number. Okay.
00:23:34
Michelle Dexter: Now, as I was preparing for this webinar, I noticed something new. Historically, it did not give us an option as to whether or not we could get the letter digitally. Historically, what it would do is provide us with the number, and then everybody would get a physical letter in the mail from the IRS a month later. I always tried to warn people, “Hey, you’re going to get a letter from the IRS,” because I know when I get a letter from the IRS, it makes my heart stop a little bit. So, I always like to give that warning. They’re just sending you a copy of the confirmation that someone obtained an EIN, and that’s all that is.
00:24:16
Michelle Dexter: It looks like now they’ve updated it so that you can either receive the letter digitally or receive it by mail. Whichever one you prefer is fine. Either way, once you submit, they’re going to provide you with that EIN number. And again, you’re going to want to print that page to save that information.
The EIN number is what you will use for future tax returns for the trust. Okay? Anytime you open up a new account for the trust, that is going to require an EIN number to replace the deceased trustmaker’s Social Security number. This ensures that all future income and taxable transactions come through this new tax ID number and are not tied to a trustmaker who has passed away.
00:24:39
Michelle Dexter: So, it is important to have an EIN when you need it. It’s important that the accounts are updated and created in a way so that you are utilizing the EIN properly. You don’t always have to file a tax return for a trust administration, but you’re probably going to need that EIN just to get the accounts converted and to give that number to the different financial companies who are going to want to know where to report any taxable income. Okay.
00:25:07
Importance of Record Keeping and Troubleshooting
Michelle Dexter: So, with the online application process, you can submit your EIN request and receive the EIN immediately. Make sure you keep the paperwork in case you run into any issues. Getting a hold of the IRS after the fact can be really difficult. You can fax them some information, but it’s really hard when, for example, maybe two people have applied for an EIN number for the same entity, and now we’ve got competing files.
00:25:54
Michelle Dexter: To get some of that cleared up with the IRS can be difficult. You want to make sure that you’re documenting any communication with them and keeping good records, such as using certified mail to confirm that they received your documents, and those types of things. Okay? So, make sure that you’re keeping all the paperwork in case you run into any issues.
Keep in mind that issues can arise when the responsible party and/or the trustee is not a US citizen or does not have a Social Security number. That’s one of those situations where, again, you can’t do it online. You’re going to have to submit everything directly to the IRS via mail or fax, and it’s going to take a bit of time to get that information back.
00:26:35
Michelle Dexter: So, just know that if you are considering naming someone who is out of the country and is not a US citizen to administer your trust after you’re gone, it could cause some delays in their ability to manage the assets.
And then finally, know that issues arise when the trust funded date is years old. I don’t have an exact number of how many years it takes before it triggers a problem, but I know we’ve run into problems with that in the past. You want to use the date of death of that second person as the trust funded date because technically, that is when it converted from a revocable trust to an irrevocable trust.
00:27:09
Michelle Dexter: It’s really important that we’re using the correct date on that, which is the date of death of that last trustmaker. That is really a key part of being successful in this application process.
Q&A and Audience Questions
Michelle Dexter: I thank you all for attending this. When we talked about doing this topic, I knew we got a lot of questions about completing forms for an EIN, and I thought, “This is pretty boring,” but a lot of people seemed to have an interest in it, so I definitely wanted to do it, and I’m glad that we did.
00:27:55
Michelle Dexter: It looks like Susan’s got a question, but first of all, Alexis has included information about our next upcoming webinar. So if you’re interested in that, please take a look in the chat box, and you’ll see the registration links. You know we do value education here. So in addition to our webinars, Francisco also does our Intentional Living Summits for our TrustCare members. You should be seeing information for that upcoming one in September, but you’ll also see those upcoming webinars: one is an introduction to Wills and Trusts, and another one is titled, “We’re about to retire with 1.5 million in rental properties and investments. What should my estate plan look like?” So, register for those if you’re interested.
00:28:36
Michelle Dexter: Susan asked, “Would you get an EIN immediately if you put the wrong date the trust was funded? How do you fix it?”
If you need to fix that, that’s when you’re going to have to mail a letter to the IRS and give them notification to update that date. That’s the best thing you can do. So, if you already got the EIN but you put the wrong date in it, send them a letter saying you inadvertently put the wrong date for when the trust was funded.
00:28:59
Michelle Dexter: And like I said, I would keep documentation to show that you’ve sent it and that they received it. I don’t know what they do on their end with it, and I don’t think it will ultimately change your actual EIN number, but you can at least be on record that you gave them notification of it. If they fail to do something with it on their end, then that’s on them, not on you.
Good question, Susan. I know a lot of people feel like obtaining the EIN is the very first step, so they’ll rush into getting it. Sometimes I’ve heard of financial advisors getting it for people, and I do worry a little bit that people are jumping ahead of themselves and trying to fill out things when they’re not really sure what they’re filling out.
00:29:43
Reviewing the Physical SS-4 Form Fields
Michelle Dexter: On the physical SS-4 form, there is a line for the date that the accounting period ends. I usually put December on that. Let me go back to that real quick and I’ll show you guys. Interestingly, the system didn’t ask for it this last time when I was filling out the online application.
00:30:10
Michelle Dexter: But looking at the paper form, like the top part: the legal name is the trust, the trustee is whoever is acting as trustee, and then the responsible party and their Social Security number. Then down here, you mark that it’s a trust and enter the trustmaker’s tax ID number. The reason for applying is “Created a trust,” and specifically an “Irrevocable trust.” The closing account month is December. The “Date business started” is that date of death of the second trustmaker.
00:30:38
Michelle Dexter: I usually put the number of employees as zero across the board. And then there on number 16, “Other,” I just write “Trust administration” and state that no specific product is being provided. Down here at number 18, it asks, “Has the entity ever applied for an EIN before?” In most of these cases, the answer will be no.
00:31:15
Michelle Dexter: You want to make sure that if there is someone who has previously obtained an EIN and now you are changing who the trustee is, you do need to give notification to the IRS within 60 days that the trustee has changed. It kind of stinks when people get an EIN and then they lose it, or they’re not sure what it is anymore, or they don’t have any documentation, and then they try to apply for a second one. That can cause a few problems.
00:31:38
Michelle Dexter: Sometimes we see this happen during the handoff from one trustee to another, where they don’t remember where that original paperwork is. In those cases, we have to check “Yes, one has been applied for before, but nobody knows what is happening with it or where to find it.” Then you have to go through the slow snail-mail process of reaching out to the IRS to see if you can track that information down. So, it’s definitely one of those things that seems easy enough, but it is pretty important.
00:32:01
Working with Financial Institutions and Wrap-up
Michelle Dexter: As part of our trust administration services, obtaining the EIN is something that we would handle for you. But if you’re doing it on your own and you want to try to apply for this on your own, these are the steps.
Hopefully, I’ve helped some of you today, and you’re able to go forward if you need this—or at least you now have the information on what it looks like after you and your spouse pass away, and how easy or difficult it is for your successor trustee to obtain this information.
00:32:31
Michelle Dexter: I spoke with somebody earlier this morning who was trying to take over a trust as trustee for his mom. He’s named as the successor trustee, and mom doesn’t want to manage it anymore. He went to the bank with the documents, and he told me, “The bank won’t take the trust documents.”
I said, “Well, help me understand exactly what it is you’re trying to do.”
He said, “I wanted to be added as the trustee.”
I explained, “Well, the bank doesn’t just do that without very specific documentation.”
00:32:50
Michelle Dexter: Just know that sometimes it can be frustrating for those of you trying to execute certain tasks. You think, “I’ve got the tax ID number, and the trust says I’m the successor trustee.” But the banks are looking for specific information. They are looking for a Certification of Trust that outlines what happened to the original trustmaker and explains why you are now acting as trustee.
00:33:11
Michelle Dexter: There are different steps that take place when we’re adding someone as a trustee. Whether the trustmaker is appointing you as a co-trustee immediately, or whether they are incapacitated—in which case we have to show documentation from a healthcare provider stating that they can’t make financial decisions—or if they have passed away.
Banks want those things outlined in a notarized document that states what the tax ID number is and what the new title to the trust is. They are looking for very specific documentation; they aren’t willing to sit down, decipher someone’s entire trust booklet, and figure out whether or not you have authority.
00:34:08
Michelle Dexter: So, just know there are some things you can do on your own, but when you start to get frustrated because it’s not going as smoothly as you want, that may be when you need to consult with a professional who can help you secure the exact documentation you need to make it go smoothly. Having a trust is definitely a much smoother process overall, but if you don’t understand how the trust works or the exact documentation required to get from point A to point B, you’re going to be frustrated.
00:34:33
Michelle Dexter: The employees at banks and financial institutions mostly aren’t educated enough on this specific subject to advise you on how to do it, and they certainly aren’t going to give you legal advice. So, I caution you to be careful when doing some of these things. Yes, it’s something you can do, but you want to make sure that you’re doing it right, that you’ve got all the right information, and you also want to make sure you have the legal authority to do it.
00:34:44
Michelle Dexter: We really hope that you’ve enjoyed today’s presentation and that you’ll join us for future presentations. If anybody else has any questions, I’m happy to stick around for a few minutes and answer those. But otherwise, that is my presentation on how you apply for an EIN—an employer identification number—after your trustmakers have passed away.
00:35:07
Michelle Dexter: Thank you guys so much, I appreciate your time. Thank you, Susan. I appreciate you guys hanging out with us, and we look forward to future presentations. If anybody has any suggestions for future presentation topics, please feel free to reach out to us.
Alexis, I think we have an email address called info@keystonelawfirm.com where people can send suggestions for future webinars. We try to do about one webinar a month each. So if there’s anything you are thinking you might want in terms of information, please let us know because we’d be happy to consider it.
00:35:54
Michelle Dexter: Otherwise, thank you so much for your time today. It was great seeing you all, and we hope you have a fabulous day.
I think Alexis is going to put that email address in the chat for anyone who has suggestions. Thank you. Yes, info@keystonelawfirm.com. Thanks everybody for your time today. This presentation will be available on our YouTube channel probably in about two weeks. So if you want to go back, review it, slow it down, blow it up, and do all those things, you should be able to do that in a couple of weeks. Thanks again for your time today. We’ll see you later. Bye.
Transcription ended after 00:36:55
