How do we title a checking/deposit account for beneficiaries of a land trust and who would be the authorized signer? Also, do we actually need to obtain a Tax Identification Number for a land trust?

We are not aware of any specific legal restrictions regarding titling deposit accounts for land trusts. The IRS has requirements for name controls, which require banks to establish name controls using the first four letters of a customer’s name. The IRS has stated that “[t]he name control for a trust or fiduciary account is developed from the name of the person in whose name the trust or fiduciary account was established. For example: Jonathan Periwinkle, Memory Church Irrevocable Trust.” IRS Publication 1586, p. 17. The FFIEC’s BSA/AML Examination Manual also provides some guidance on complying with the Customer Identification Program Rules, which require financial institutions to verify the identity of a trust. Trust and Asset Management Services—Overview. The Examination Manual states that “based on the bank’s risk assessment of a new account opened by a customer that is not an individual, the bank may need “to obtain information about” individuals with authority or control over such an account, including signatories, in order to verify the customer’s identity.” Trust and Asset Management Services—Overview. The guidance also says that as a “sound practice”, the bank should determine the identity of any party that may have control over the account, such as trustees.

We also believe that you would have to obtain a tax ID number for a land trust, as you would for any other type of trust. The Customer Identification Program (CIP) rules require that you obtain a tax ID number from all customers, including trusts. 31 CFR 1020.220(a)(2)(i). A “customer” includes any person opening a new account (31 CFR 1020.100(c)(1)(i)), and the term “person” includes individuals and legal entities (31 CFR 1010.100(mm)). Also, the term “account” includes “a relationship established to provide . . . trust services.” 31 CFR 1020.100(a)(1). See also the FFIEC’s BSA/AML Examination Manual, which states that the CIP rules require financial institutions to verify the identity of a trust. Trust and Asset Management Services—Overview.

Whether you need to obtain a separate EIN for a trust, rather than using the grantor’s social security number, depends on how the trust’s tax return is filed. The instructions for the estate tax return, Form 1041, state that every trust that is required to file Form 1041 must have an EIN. Form 1041 Instructions, Employer Identification Number. However, some trusts are not required to file Form 1041 returns. For example, if a trust is considered a “grantor trust,” it is not required to file a Form 1041, and we would assume that the grantor’s social security number would suffice for that type of trust. Form 1041 Instructions, Optional Filing Methods for Certain Grantor Type Trusts.