Revocable Trusts and 1041

04/14/2012

I get a number of questions from clients regarding whether a revocable living trust needs to obtain a taxpayer identification number and/or file a separate tax return.  In general, you will not need to file a separate trust tax return (IRS Form 1041), for your revocable living trust as long as you are alive and serving as the sole Trustee or as a Co-Trustee of the trust. This is because under these circumstances the taxpayer identification number that will be used for your revocable living trust will be your social security number, and so all interest, dividends and other income earned by the assets held in your trust will be reported to the IRS under your social security number and on your IRS Form 1040, not on a separate Form 1041.

There are, however, a few circumstances where a separate taxpayer identification number may be required for your revocable living trust and Form 1041 will then need to be filed.  Generaly, if you become mentally incapacitated, then the successor trustee who takes over in the event of your disability will need to obtain a separate taxpayer identification number, called an "Employer Identification Number," or "EIN," for your revocable living trust. The successor trustee will use this EIN to file a Form 1041 which is a tax return for the revocable living trust.