Can Successor Trustee Use Old TIN?

Question:

A lawyer that our bank in Missouri deals with from time to time is working with a successor trustee on a trust where the grantor has passed away. The lawyer told us that the successor trustee can use the old TIN (deceased grantor's SSN) because the trust is being dissolved. Also, the trust is still revocable even though the grantor is deceased. It was our understanding that once the grantor passes away, the trust either dissolves or becomes irrevocable, and that a TIN must be obtained. Is this correct or do rules differ from state to state?

Answer:

Naaah, that's not right. It's a matter of federal, not state, law. The IRS uses an analogy that says whoever owns the tree also owns the fruit. Hence, the income paid on the trust must be reported to the owner and, with all due respect, the decedent does not own anything anymore.

It's likely that that trust needs an EIN, but there is no way to be certain without reading it. If you do not get a new number you can comfortably remove the one you have because you know it's wrong. Then, you would have an account with no TIN and you would impose backup withholding.

That will get their attention and, if the trust needs to be dissolved, they will start moving in that direction.

First published on BankersOnline.com 1/10/11