RE: Opening an account for a Discretionary Special Needs Trust

September 7, 2011

If the trust was drafted by the attorney as a Grantor Trust under the IRS

regulations, then all income is taxed to the Grantors, regardless if you use the

Grantor's SSN or a FEIN. I will email Ellen my handout which explains this

topic. We give it to our clients. Grantor Trust have an option of using an FEIN

or the SSN but all is taxed on their 1040s anyways. The attorney should have

explained this and provided you a handout on this topic.

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From: IPADDUnite [mailto:IPADDUnite ] On Behalf

Of julpru@...

Sent: Wednesday, September 07, 2011 10:33 PM

IPADDUnite

Subject: Opening an account for a Discretionary Special Needs Trust

I am the grantor/trustee for this trust and will be using my SS# for the tax

ID#. I'm wondering if anyone else has used their SS# and if it is advisable to

do so

September 7, 2011

TRUST'S TAX IDENTIFICATION NUMBER EXPLANATION

A typical irrevocable 3rd Party Special Needs Trust established by a parent, or

jointly by married parents, qualifies as a GRANTOR TRUST OF THE PARENTS(S), is

NOT required to use a Federal Employer Identification Number, but MAY use a

grantor's (either parent's) Social Security Number, as provided by the following

IRS Regulations.

IRS Regulation Sec. 1.671-4 ((2)(A) & (8) - Method of reporting & IRS

Regulation Sec. 1.671-1 Grantors and others treated as substantial owners;

scope.

(a) Subpart E (section 671 and following), part I, subchapter J, chapter 1 of

the Code, contains provisions taxing income of a trust to the grantor or another

person under certain circumstances even though he is not treated as a

beneficiary under subparts A through D (section 641 and following) of such part

I. Sections 671 and 672 contain general provisions relating to the entire

subpart. Sections 673 through 677 define the circumstances under which income

of a trust is taxed to a grantor. Some of these circumstances are: (1) If the

grantor... has retained a reversionary interest... (Section 673); (2) If the

grantor... has certain powers over the beneficial interests... (Section 674);

(3) If the grantor... has certain administrative powers over the trust...

(Section 675)... among others.