Frequently Asked
Does a Custodianship need a Tax ID (EIN)?
A custodianship arises when a third party, usually a large financial firm, becomes in charge of another individual’s assets, usually for the purposes of investment. For some investments, the custodianship accounts may remain under the individual’s own tax ID or EIN. For other accounts, the custodianship account may remain under a separate EIN/tax ID until […]
Does an Escrow need a Tax ID (EIN)?
Escrow accounts are generally setup by third-party agents who are responsible for controlling assets during a major transaction, such as a real estate transaction. Because escrow accounts are separate from either the buyer or seller in the transaction, it is no longer under their SSNs or ITINs. Usually, the escrow company itself takes charge of these […]
Does a Charitable Remainder Annuity Trust need a Tax ID (EIN)?
Charitable Remainder Annuity Trusts do need a tax ID (employer identification number), and the reason why has to do with some of their major benefits. Understanding why some trusts have EINs and some doesn’t involves understanding how trust accounts work. Trust accounts can be irrevocable or revocable. An irrevocable trust cannot be changed for the duration […]
Does a Charitable Lead Unitrust need a Tax ID (EIN)?
Charitable lead unitrusts are becoming far more popular as a method of protecting one’s assets and handing them over to a charity of choice. Since these trusts are irrevocable, they need their own tax ID/EIN. They will be monitored by a third-party with the interest of ensuring that the assets grow responsibly and to the best interest […]
Does a Settlement Fund (under IRC Sec 468B) need a Tax ID (EIN)?
Settlement funds can be very complicated. A company may be required to pay a $5 million settlement towards those claimants who were affected by its product, but it may not know whether there are 500 or 5000 claimants. The settlement fund ensures that the entirety of the $5 million is set aside and that every […]
What is a Charitable Lead Unitrust? | IRS Definition of a Charitable Lead Unitrust
If a donor wants to donate money to charity, but doesn’t want to sell off their assets, they can instead create a charitable lead unitrust. Under a charitable lead unitrust, the donor puts their assets in a trust, and the trust pays out money to the charity every year. As an example, a donor might put […]
Does a Pooled Income Fund need a Tax ID (EIN)?
Multiple donors are able to donate to charity at once through a pooled income fund, which provides tax benefits to donors while also letting them donate to charitable organizations. A pooled income fund requires its own tax ID, also known as employer identification number, because it isn’t under the control of any of the donors or […]
What is an Irrevocable Trust? | IRS Definition of a Irrevocable Trust
An irrevocable trust is a trust that cannot be removed or modified by the individual who originally set it up. Commonly, irrevocable trusts are created as part of a will; it cannot be modified because the individual who provided the assets is deceased. But an irrevocable trust can also be made during someone’s lifetime, they […]
What is a Settlement Fund (under IRC Sec 468B)? | IRS Definition of a Settlement Fund (under IRC Sec 468B)
A settlement fund is a fund that’s designed to protect assets that are being distributed during a settlement until it can be disbursed. Consider a legal settlement that needs to disburse $20 million to 2,000,000 individuals. The fund will be able to certify that the assets are there to be disbursed, and will make it easier […]
Does a Qualified Funeral Trust need a Tax ID (EIN)?
Many people worry about talking with their family regarding their final arrangements. But final arrangements can also be made before someone passes, to ease the burden on family and friends. With a qualified funeral trust, an individual is able to pay for and plan their final arrangements in advance. The funds are kept in a QFT […]
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