A trust is a legal arrangement that stipulates particular rules for property held in trust for a person or persons, called beneficiaries. By placing property in trust, you can achieve several objectives, including immunity from estate taxes. You can also avoid probate, saving you both time and money upon an untimely death. To enjoy these benfits, you must first apply for a Trust Tax ID.
A trust has three main parts: the principal, the interest or dividends earned by the principal, and the profits (if any) from the interest bestowed by the principals, sometimes called capital gains. The rules and stipulations outlined by the grantor (the individual who creates the trust) will determine who gets the income, capital gains, and so on.
Other benefits of a trust include greater control over wealth and assets, protection of personal legacy from heirs’ creditors, and increased privacy, as assets can pass outside of public probate.
There are two types of Federal Tax ID a trust might need depending on the type: revocable and irrevocable.
All irrevocable trusts must obtain a Federal Trust Tax ID number.
The Internal Revenue Service (IRS) uses Federal Tax ID numbers to distinguish various business entities and irrevocable trusts. Your Trust Tax ID will be a nine-digit number specific to your trust.
If you’re considering a trust to manage your assets, don’t wait to apply for a Federal Tax ID number. Our online forms make this process easy, and we work hard to get your Tax ID number to you as quickly as possible. Whether you are applying for a Tax ID Number in Virginia, a tax id number in Colorado, or elsewhere, we can help.