Legal Question in Wills and Trusts in California
My dad & mom established a Revocable Living Trust in June of 1994. My dad passed away four years ago, and my mother is the living Trustee; however, she has become incapacitated due to Altzheimers/Demenia. I am the Successor Trustee. I would like to set up the bank account so that I can write checks and pay her bills out of that account.
The bank told me that I need to establish a Tax ID first under the name of the trust they established. When I do this, do I list my mother's social security number to obtain the Tax ID number, or do I list my social security number to obtain the Tax ID number?
I would think that I would list my mother's SS# since she is still living, even though she is incapacitated due to dementia (I already know that I need 2 physician's statements regarding her current state of mind - which I have). I have already filed with the county that we live in, a Declaration And Acceptance Of Trustee To Act On Behalf Of Trust.
It is all done. My only question now is regarding when setting up the bank account, they said we need a Tax ID number for this trust, and I need to know whose SS# to use to obtain the Tax ID number.
I would really appreciate some legal knowledge regarding this so I know how to proceed.
Thank you
Susan
1 Answer from Attorneys
The answer to your question is that the bank is wrong. You do not need a Federal Employer Identification Number (FEIN) when the grantor is alive (which you mom is). You just use her social security number for all bank accounts, brokerage accounts, etc. This is nothing new.. the banks personnel do not have adequate training and do not know the law. I suggest you retain an attorney who can assist you with your duties as the Trustee and make sure you do what is required as a Trustee and fiduciary of the Trust and do everything that you are legally required to do. You sure don't want to get sued when you did not intentionally do something wrong. There are a lot of laws to be concerned with along with tax issues.
I also suggest that it is possible that when your dad died the trust estate may have been required to be split into multiple sub-trusts. If that was not done, it is a good idea to do that now and not wait until later. There are various ramifications to not complying with the terms of the trust including incurring possible estate taxes that could or would have been avoided had the trust terms been complied with.
Only an irrevocable trust must obtain an FEIN and file a IRS form 1041 each year. Depending on the terms of the trust, the irrevocable trust may or may not pay any tax for each year.
The physicians statements to which you refer may be required as a part of the terms of the trust so that the successor trustee (you) is then able to proceed as the trustee.
You should have a certification of trust prepared and with that document, you then would be able to open your bank accounts, etc to handle all the trust duties.
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