If I create a living trust, do I need a separate tax ID number while I’m alive? – North Carolina

Short Answer

Usually, no. In North Carolina, most “living trusts” used for estate planning are revocable trusts, and while the person who created the trust is alive and can revoke it, the trust is commonly treated as part of that person’s own tax picture for income-tax reporting.

That said, some banks and title companies may ask for an EIN for administrative reasons, and an EIN is typically needed once the trust becomes irrevocable (often at death) or if the trust is set up in a way that is not treated as the creator’s own for tax reporting.

Understanding the Problem

In North Carolina estate planning, the question is whether creating a living trust to hold property (such as a home and vehicles) requires a separate tax identification number while the person who created the trust is still alive and in control. The decision point is whether the trust is set up so it functions as a revocable, “during-life” planning tool versus a trust that operates as its own separate taxpayer during life. Timing matters because the answer can change after death or after a trust becomes irrevocable.

Apply the Law

North Carolina generally follows federal income-tax concepts for how trusts are taxed, and the state has its own rules for when a fiduciary must file a North Carolina fiduciary income tax return. Under North Carolina law, when a trust is a separate taxpayer with taxable income and is required to file under federal rules, the fiduciary may have a state filing obligation as well. Practically, many living trusts used in estate planning are designed so that, during the creator’s lifetime, the trust’s income is reported under the creator’s Social Security number rather than under a separate EIN. If the trust becomes irrevocable (often at death), the trustee commonly needs an EIN and may need to file fiduciary income tax returns.

Key Requirements

Trust type and control: If the trust is revocable and the creator keeps control (often serving as trustee and beneficiary during life), it is commonly handled as part of the creator’s own tax reporting while alive.
Whether the trust is a separate taxpayer: If the trust is treated as its own taxpayer (more common with irrevocable trusts), it generally needs its own tax ID number and separate fiduciary income tax reporting.
Financial institution and titling requirements: Even when a separate EIN is not legally required for income-tax reporting during life, a bank or other institution may request an EIN to open accounts or retitle assets in the trust’s name.

What the Statutes Say

N.C. Gen. Stat. § 105-160.2 (Income tax on estates and trusts) – North Carolina’s fiduciary income tax generally applies to the taxable income of estates and trusts as determined under federal concepts, with state-specific adjustments.
N.C. Gen. Stat. § 105-160.5 (Fiduciary returns) – A fiduciary must file a North Carolina fiduciary income tax return when the estate or trust has taxable income and is required to file under federal rules (and in certain other situations).

Analysis

Apply the Rule to the Facts: The facts describe a property-focused living trust being considered alongside a will and other estate-planning documents. If the trust is structured as a typical revocable living trust during [CLIENT]’s lifetime, it is commonly administered so that income is reported under [CLIENT]’s Social Security number while [CLIENT] is alive and in control, rather than using a separate EIN. If the plan involves a trust that operates as a separate taxpayer during life (or if an institution insists on an EIN to hold a trust bank account), then an EIN may be needed even before death.

Process & Timing

Who sets it up: The person creating the trust (the “settlor”) signs the trust and typically serves as initial trustee. Where: The trust is created by signing documents (not by filing a case in court). What: A written trust agreement plus follow-through steps to transfer/retitle assets into the trust. When: Before assets are retitled, confirm whether the trust will use a Social Security number during life or whether an EIN will be requested by a bank or other institution.
Funding step: Retitle the home (by deed) and other assets intended for the trust. For vehicles, confirm with the North Carolina Division of Motor Vehicles what titling approach is accepted for a trust and whether the trust name must appear on the title.
Ongoing administration: Keep records showing which assets are in the trust and how income is reported. If the trust becomes irrevocable (often at death), the successor trustee typically obtains an EIN and evaluates whether fiduciary income tax returns are required.

Exceptions & Pitfalls

Bank/account setup issues: Some institutions will not open an account titled in the name of a trust without an EIN, even if the trust is revocable and the creator is alive. Planning for this early avoids delays when moving funds or refinancing.
Confusing “probate avoidance” with “tax savings”: A revocable living trust is often used to streamline administration and avoid probate for trust-titled assets, but it does not automatically change income-tax reporting during life.
Incomplete funding: Creating the trust document without retitling key assets can leave the estate still needing probate for those assets, even though a trust exists.
Irrevocable trust rules: If the trust is designed to be irrevocable during life, or if it has its own taxable income as a separate taxpayer, the EIN and fiduciary return analysis changes and should be reviewed carefully.

Conclusion

In most North Carolina estate plans, a living trust is a revocable trust, and it usually does not need a separate tax ID number while the creator is alive and in control; income is commonly reported under the creator’s Social Security number. The practical exception is when a bank or other institution requires an EIN to title accounts, or when the trust is structured to be a separate taxpayer during life. The most important trigger is when the trust becomes irrevocable (often at death), when an EIN is typically obtained and fiduciary filing duties are reviewed.

Talk to a Estate Planning Attorney

If you’re dealing with whether a living trust needs its own tax ID number (and whether a trust plan makes more sense than a will-based plan), our firm has experienced attorneys who can help explain options, paperwork, and timelines. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.