IBA Compliance Connection

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A customer with a trust account died, and their successor trustee obtained a new employer identification number (EIN) for the trust. The trust account was opened using the deceased customer’s social security number (SSN). Is it a best practice to close the account and open a new account with the trust’s new EIN for tax reporting purposes?

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Yes, we recommend closing the trust account with the deceased customer’s SSN, opening a new account with the trust’s new EIN, and having the successor trustee sign a new signature card.

The IRS requires a trust to obtain a new EIN if the trust changes to an estate, a living trust changes to a testamentary trust, or a revocable trust changes to an irrevocable trust — which appears to be the case here, since the settlor has died.

Consequently, we recommend opening a new account with the new EIN for tax reporting purposes to avoid improperly reporting interest to the IRS under the deceased customer’s SSN.

For resources related to our guidance, please see:

  • A trust changes to an estate
  • A living (inter vivos) trust changes to a testamentary trust
  • The revocable trust changes to an irrevocable trust”)