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<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">I’m not sure what you mean when you say that the surviving spouse is the TR.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">A credit shelter trust is usually not a grantor trust, and thus it needs its own EIN and it needs to file its own income tax returns (fiduciary income tax Form 1041). But
if it has no income, and no bank accounts, then no returns are needed and no EIN is needed. But if it sells the house, the title company will require an EIN in order to report the sale proceeds to the trust and to the IRS.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Here is a longer version on this answer:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Garamond",serif">The Ninth Circuit, sitting
<i>en banc</i>, has held that a credit shelter trust is not a grantor trust. In <i>
United States v. DeBonchamps</i>, 278 F.2d 127 (9<sup>th</sup> Cir. 1960), the Ninth Circuit held that a surviving spouse who had the right to withdraw income, but whose right to withdraw principal was limited by a standard, would be taxable on the income,
but not on the capital gains, even though the standard was a rather loose one. In
<i>DeBonchamps</i>, the rights were created by a deed that granted to the surviving spouse an income interest, along with the right to withdraw principal under a standard, with the remainder passing to a remainderman. Although a trust was not expressly created,
the court held that the situation would be taxed as if it were a trust, the grantor trust statutes would not apply, and the capital gains would be taxed to the trust, not to the surviving spouse. See also, Blattmachr, Gans, and Lo,
<i>A Beneficiary as Trust Owner: Decoding Section 678</i>, ACTEC Journal, Vol. 35, No. 2, Fall 2009, which reached the conclusion that the right to withdraw income, combined with the right to withdraw principal under an ascertainable standard, did not trigger
grantor trust status under §678(a)(1).</span><span style="font-size:15.0pt;font-family:"Garamond",serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Garamond",serif">Thus the safest answer seems to be that a typical credit shelter trust is not a grantor trust, and it should obtain its own EIN (employer identification number) and file a separate
income tax return, in which case the surviving spouse will be taxed on the ordinary income through the issuance of a K-1, and the trust will be taxed on the capital gains. This also means that a personal residence held in a credit shelter trust is not eligible
for the capital gains exclusion on personal residences provided by §121. PLR 200104005; PLR 199912026; Reg. §1.121-1(c)(3).<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Times New Roman",serif">Phil Jones<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Times New Roman",serif">Portland, OR
</span><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Philip N. Jones<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Duffy Kekel LLP<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">900 S.W. Fifth Ave. Suite 2500<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Portland, OR 97204<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><a href="mailto:pjones@duffykekel.com"><span style="color:#0563C1">pjones@duffykekel.com</span></a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">(503) 226-1371 – office<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">(503) 853-1482 – cell<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">(503) 226-3574 - fax<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Ken Luce<br>
<b>Sent:</b> Friday, March 12, 2021 1:00 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> [WSBAPT] EIN for CST<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Q: <i>If a disclaimer credit shelter trust only contains a residence and the surviving spouse is the TR, does the disclaimer trust need a separate ein number? Have situation where one was not obtained and 700k has disappeared.<o:p></o:p></i></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif">Ken Luce<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif">Luce & Associates, P.S.<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif">4505 Pacific Hwy. E., Suite A<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif">Tacoma, WA 98424<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif">T: (253) 922-8724<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif">F: (253) 922-2802<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><a href="http://www.lucelawfirm.com/"><b><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:blue">www.LuceLawFirm.com</span></b></a><b><span style="font-size:8.0pt;font-family:"Arial",sans-serif">
</span></b><a href="https://www.facebook.com/pages/Luce-Kenney-Associates-PS/200703820101348"><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:windowtext;text-decoration:none"><img border="0" width="24" height="24" style="width:.25in;height:.25in" id="Picture_x0020_1" src="cid:image001.gif@01D71741.9353E160" alt="e943ecc8-5be2-4768-a17e-1b829b908afe"></span></b></a><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif"><o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-family:"Garamond",serif"><o:p> </o:p></span></b></p>
<p class="MsoNormal" style="text-autospace:none"><b><span style="font-size:8.0pt;font-family:"Arial",sans-serif">IMPORTANT NOTICE TO EMAIL RECIPIENTS</span></b><b><span style="font-size:9.0pt;font-family:"Arial",sans-serif"><o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:8.0pt;font-family:"Arial",sans-serif">1. The information contained in this e-mail and accompanying attachments constitute confidential information which may be legally privileged and is
intended for the sole use of the addressee. If you are not the intended recipient of this information, any disclosure, copying, distribution or the taking of any action in reliance on this information is strictly prohibited and may be unlawful. This information
is the property of Luce & Associates, P.S. If you received this e-mail in error, please notify us immediately by return e-mail or by calling (253) 922-8724.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:8.0pt;font-family:"Arial",sans-serif">2. This e-mail transmission may not be secure and may be illegally intercepted. Clients of Luce & Associates, P.S. are asked to use their best judgment
in determining whether the topic of an e-mail response is such that it would be better saved for a more secure means of communication.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:8.0pt;font-family:"Arial",sans-serif">3. The sender believes that this e-mail and any attachments are free of any virus. However, by reading this message and opening any attachments,
the recipient accepts full responsibility for taking remedial action regarding any viruses or other defects.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:8.0pt;font-family:"Arial",sans-serif">4. All Luce & Associates’ attorneys are licensed to practice law in Washington and do not intend to give legal advice to anyone with legal matters
not involving Washington law or federal law or to those who are not clients of this firm.
<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
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