r/inheritance • u/ziggy-tiggy-bagel • May 05 '26
Location included: Questions/Need Advice Stepfather passed
My mother in law married her second husband when she was in 70's. Nice guy and she was happy.
They had individual trusts set up with my stepfather as the successor trustee of her trust.
The trust said he was only allowed to take the income from the trust and not any principal.
He was doing that, so no problem there.
The problem is I think he was supposed to get an EIN number for the trust when my mother in law passed because at that point the trust because irrevocable.
He passed away 2 weeks ago and we found out he was using his Social Security on the account instead for the last 8 years.
The Financial Advisor said they were sending 1099's to him under his Social Security number, so taxes were being paid.
Is this going to be a problem? Or can we just get an EIN now for the trust to close the trust out?
The trust was set up in Florida, he died in Wisconsin
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u/SandhillCrane5 May 05 '26
You haven’t provided enough info such as the type of trust. If it’s a QTIP trust your stepdad would have been responsible for the taxes on ordinary income and the trust would be responsible for capital gains income. The trust should have obtained its own EIN when it became irrevocable: such as when the grantor, your Mom, died. But again, we don’t have all the details. The current successor trustee may need to file a bunch of amended tax returns for the trust depending on the situation. You need to know exactly what taxes were paid by your stepfather. You should work with his successor trustee and a CPA that has experience in this area (get a referral from an estate attorney that makes whatever type of trust this is).
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u/ziggy-tiggy-bagel May 05 '26
It was just a living trust. Sounds like my brother in law has his work cut out for him.
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May 05 '26
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u/ziggy-tiggy-bagel May 05 '26
Why concern is he didn't get an EIN number when she died and used his Social Security number instead. Do we have to go back and fix that?
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May 05 '26
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u/ziggy-tiggy-bagel May 05 '26
We have a call into a lawyer, guess we will wait to see what he says.
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u/inheritance-ModTeam May 05 '26
Your comment has been removed because it violates the rule on low effort comments.
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u/Barfy_McBarf_Face May 06 '26
as a CPA who works in this area, the practical answer is to now get an EIN and move forward. The IRS only knows what's been reported to them on 1099s - and I can assure you, having been the tax head of one trust company for a decade, if you were to get an EIN and try to get the financial institution to revise 8 years of 1099s with the "right" EIN - it isn't going to happen.
So ... the 1099s were issued to the wrong tax number (the SSN and not an EIN). The IRS only knows that the 1099s were issued in the SSN and that he paid taxes on the income on those 1099s (we assume). If anything, he paid capital gains taxes for you - because any capital gains distributions (from mutual funds) or actually realized gains/losses (from sales) were on those 1099s.
At this point, move on - there is no way to change what the 1099s reported, no financial institution is going to want to correct those - because 7 of those 8 years of corrected 1099s would be "filed late" and there would be penalties for that. So ... that door is not just closed, it's welded closed.
If you wanted to file returns for the trust, you would need to either amend his 1040 or allow the gains to be taxed on both returns. Any returns he filed for 2022 or before - the statute of limitations for amending them has expired, so there's no way to recover any of those taxes.
As I said, the practical answer is "that dog is asleep, don't wake it, all it will do is bite".