[WSBAPT] Probate Estates and Decedents' Revocable Trusts With Non-Resident Alien Fiduciaries

[John Sullivan]

Listmates:

I do not believe I have ever dealt with the particular situation I find myself in at the moment, at least not since the enactment of the Patriot Act. I have two King County probate estates and one (fortunately) formerly revocable trust created by Washington decedents. All three have non-resident alien individuals as fiduciaries. This set of circumstances poses some challenges.


  1.
IRS:  To get an EIN for an estate the instructions to the Form SS-4 say one must provide a SS/EIN/ITIN of the Personal Representative. And you get an error message if you try to apply for the EIN on the IRS website. To obtain an ITIN for a nonresident alien individual the instructions require you to include a Form 1040 that the individual will have to shortly file. The instructions to the Form W-7 states there are exception. I thought needing one to get an EIN for a U.S. court established probate estate would be an exception. But noooo. Then a client's CPA in Australia tells me to ignore the instructions to the SS-4 and type in "FOREIGN" instead of an ITIN on a physical Form SS-4. I did so and faxed it to an IRS office in Austin, TX. I never heard from them. When I called, they informed me the faxed form was "too dark." Okay, I fix that and fax a more legible Form SS-4. Another month passes. Several phone calls (including a mandatory hour on hold for each) later I, as Third-Party Designee, am told the EIN, but cannot get a confirmation letter because "it's not in the system yet, it will go out in four business days." When I called back four days later, they would not fax it to me because they had already mailed it to my client in Melbourne, Australia. Who knows when it will arrive. Anyway, I have an EIN for the estate. Getting one for the formerly revocable decedent's trust was easier. I was able to get it online because for some inscrutable reason they do not want a SS/EIN/ITIN from a Successor Trustee. You would think obtaining the EIN for the estates and trust would solve my problems. But no - they are just beginning.

  2.
Banking Regulations:    The trust owns a dairy farm down in Puyallup, the sale of which was supposed to close today. It did not because no bank or credit union can open an account for a probate estate or trust with a nonresident alien person who is not in the U.S. credit rating system because he or she lacks a U.S. identifying number. One credit union officer explained this was an element of the Patriot Acts "know your customer" rules. If I could get ITINs for them from the IRS, opening an account would be possible. So, the sale of the farm is held up, and one estate cannot gain access to the substantial funds held in a WA credit union in the name of the decedent.

  3.
Workarounds?:    In the case of one of the probate estates, the beneficiaries are U.S. persons, who have SS numbers. I have suggested we substitute one of them under a TEDRA Agreement that leaves the executor of the dominant foreign probate estate ultimately in charge. But in the case of the trust, all of the beneficiaries are Canadians. After this long-winded introduction I am wondering whether anyone else has dealt with these challenges, and if so, what have you done? In the case of the trust with all Canadian beneficiaries, I have suggested substituting a local Seattle fiduciary company but have not found one yet that is willing to take on the engagement. I suppose, as a last resort, I could serve, but I am very reluctant to take on any fiduciary liability personally.

Any sage advice?



Best regards,

John J. Sullivan

Attorney



Lyons | Sullivan

10655 NE 4th Street, Suite 704

Bellevue, WA  98004

425·451·2400 tel 425-451-7385 fax

www.dljslaw.com<http://www.dljslaw.com/>



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