You’ve just come across that thing called an EIN and have, as a result, been entrusted with the responsibilities of handling an estate’s finances? Well, don’t panic; you are in good company.
Many people are placed in a situation to have to tend to the books of an estate and are tasked with how to get an EIN as part of this process.
This guide details all you need to know to obtain an EIN for an estate.
You will read what an EIN is, why you need it, and how to get one. And by the end of the article, you will have a good feel about the process.
What’s an EIN?
Let’s begin with an understanding of what an EIN is before diving into the process of obtaining an EIN for an estate. An EIN, or Employer Identification Number, is a close cousin to a Social Security Number (SSN).
An Employer Identification Number is just that: a number assigned to estates and businesses by the IRS in order to differentiate it from all other entities. Not an employer? No worries—if you want one, you can get one. Various entities would need an EIN, such as an estate.
Why Does an Estate Require an EIN?
An estate is an organization set up to manage assets after a person’s death, helping control that person’s property, bank accounts, or other financial matters.
The estate must usually file tax returns and communicate with financial institutions. It is in these contexts that one needs an EIN. Here are a few reasons why an estate needs an EIN:
Filing a Return for the Estate’s Income: If the estate is earning income after the person has died, such as interest on savings accounts or rental income, you will need to complete Form 1041, U.S. Income Tax Return for Estates and Trusts. You will need to obtain an EIN to do so.
Management of Bank Accounts: If the estate has a bank account, most banks require an EIN for the estate to be paid in to settle debts or for distribution of the estate assets to the beneficiaries involved.
Probate: In the procedure for probate—the legal procedure for management and distribution of the estate—the deceased EIN is normally required for the making of legal transfers of the assets.
Now that you know why an EIN is essential to an estate, let’s discuss how to get one.
Steps on How to Obtain an EIN for an Estate
Obtaining an EIN for an estate doesn’t sound like a walk in the park, right? Don’t worry; this process may be painless for you. As long as you follow the simple steps, be it online, fax, mail, or phone, you should be good to go.
Preparation of Information Needed
Before you apply for an EIN, you will need some basic information about the deceased and the estate. This involves:
- Their name and SSN.
- Date of death.
- About the executor or personal representative—that is, the person who will supervise the estate.
Ensure that you have ready this information so that you can feed it when filling out an application.
Decide Who Will Apply
Normally, this EIN would be applied by the executor or the personal representative of the estate. If you are the executor, then it would be your duty to take charge of the taxes and finances of the estate, which means you would get an EIN for it.
Select Your Application Method
You have ways to apply for an EIN. Select which will best befit your needs:
Online Application: You can easily obtain your EIN at the most convenient and fastest method, which is online application with the IRS’s website. After filling out the online application form, you will get your EIN immediately.
Fax Application: You may also download and fill out Form SS-4, which is the Application for Employer Identification Number. You have to fax it to the IRS. It would take about some days to process.
Mail Application: You can mail in the Form SS-4. Do keep in mind that this is the slowest option. Using a mail application may take up to four weeks to receive your EIN.
Phone Application: If you are an international applicant, you can call the IRS with an international number to apply.
Completing Your Application
Whichever you have chosen, you will have to complete Form SS-4. Following is a brief summary of some of the main fields you will likely complete:
- Line 1: Put in the name under which the decedent was legally known.
- Line 3: Add the executor’s name or other personal representative.
- Line 9a: Mark the box with a check mark for “Estate.”
- Line 10: Write in the reason for applying: “Estate of decedent.”
Since you now provided the information required, you can now submit it to any of the channels you consider convenient for you—to either online, fax, by mail, or by phone.
Obtain Your EIN
You should find your EIN once you submit your application, especially if you applied online.
It will take a little more than four business days to obtain the EIN, provided you submitted your application via fax.
Applications submitted through the postal service could take an entire month, so you need to make sure you come up with sufficient time in processing your application if you decide to submit it via this method.
Use the EIN for Estate Management
Once you get the EIN, you can start applying it to estate matters. Some of these include:
- Bank account opening for your estate.
- Preparation of tax returns for an estate.
- Communications with the banks regarding assets in an estate.
Frequently Asked Questions
Do I have to pay any fee to obtain an EIN for an estate?
No. It is free, since obtaining an EIN does not attract a payment. The IRS does not charge any fee on issuance of an EIN.
Can I use the SSN of the deceased to get an EIN?
No. The SSN of a deceased individual is not available after death for estate tax purposes or other estate purposes. You have to obtain an EIN for the estate.
How long does it take to get an EIN?
If you apply online, you receive it immediately. Fax applications take about 4 business days and mailed applications take up to 4 weeks.
Does an EIN need to be obtained by a small estate?
A small estate may still be required to obtain a certain EIN if it is subject to filing of tax returns or accounts. It would always be advisable to have a tax adviser or a lawyer to guide you.
Conclusion
Obtaining an EIN for an estate might seem a bit cumbersome at first, but it is just the first step on managing the deceased assets and paying his or her taxes.
As mentioned above, you can easily and quickly apply and have an EIN, therefore taking care of the financial affairs of the estate.
At any time, should you have questions or need help, you can consult with a tax professional or attorney who would guide you on the specific aspect that would serve the estate better. Feel free to contact us. We’re here to help!
For further assistance with EIN applications, check out our EIN page. Also, you can check for more information on the IRS.
Want to know more about the process? Throw your questions in the comments below!