IRS Tax ID (EIN) Application

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 of both grantor and beneficiary. They will file their own tax returns rather than being filed under the initial grantor.

Being as the charitable lead unitrust is irrevocable, the grantor loses any non-negotiated rights to the assets once they enter into the trust. But once the trust is dissolved (usually a charitable lead unitrust has a set time period, such as five, ten, or more years), the assets will flow to the beneficiary. During the trust’s active time, it will pay out money to the charity as income, and the charity will be responsible for any tax-related consequences from that income.

Most charitable lead unitrusts will acquire their EIN upon formation, usually handled by the financial advisor responsible for setting up the accounts.