Need advice about Trust EIN and Sec 645 election - revocable to irrevocable trust

This is a good question that depends on several factors. A Sec 645 election allows the trust to be treated as part of the estate for income tax purposes, which can provide some benefits. The main advantages include: using a fiscal year instead of calendar year for tax reporting, having more flexibility with charitable deductions, and potentially qualifying for some estate tax deductions that trusts don't get. For your specific situation with $450k in assets, the election could be beneficial if you need more time to administer everything. Without the election, you'd need to file trust tax returns (Form 1041) on a calendar year basis. With the election, you could use a fiscal year that might align better with your administration timeline. Another consideration is how income is distributed. If beneficiaries are in lower tax brackets than the trust/estate, the Sec 645 election might allow for more income tax planning opportunities.

After spending weeks trying to sort out a similar trust situation for my uncle, I discovered taxr.ai (https://taxr.ai) and it literally saved me hours of research. I uploaded our trust documents, and it quickly identified all the key provisions related to the Sec 645 election and gave me a clear analysis of whether it would benefit our specific situation. What I found most helpful was that it explained exactly how the election would affect our tax filing obligations and potential savings based on our trust's assets and income.

I wanted to follow up about my experience with taxr.ai after being initially skeptical. I decided to try it with our family trust documents, and I was genuinely impressed. The analysis specifically addressed our Sec 645 election questions and pointed out considerations I hadn't even thought about regarding the timing of asset sales within our trust. It recommended making the election in our case because we had significant unrealized capital gains that would benefit from the more flexible distribution rules. The clarity it provided was worth it, and it saved me from making what would have been a costly mistake with our particular mix of assets.

For what it's worth, I spent THREE DAYS trying to get through to someone at the IRS about this exact issue last month. Kept getting disconnected or waiting on hold forever. Finally tried using Claimyr (https://claimyr.com) which I found out about from this video: https://youtu.be/_kiP6q8DX5c. They got me connected to an actual IRS specialist in about 20 minutes who walked me through the entire Sec 645 election process. The agent explained exactly what forms I needed and how to properly document the election.

I need to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway since I was getting nowhere with the IRS on my own. Used the service yesterday and got connected to an IRS agent in about 30 minutes. The agent confirmed that for my situation (similar to yours with a trust changing from revocable to irrevocable), making the Sec 645 election would give me an extra 2 years to administer everything before final distributions. This was exactly the info I needed and couldn't get anywhere else. Seriously worth it for the time saved alone.

I'm a beneficiary of a trust that went through this exact situation last year. Our trustee chose NOT to make the Sec 645 election and it was a disaster. We ended up with much higher tax bills because everything had to be processed within the calendar year instead of having the flexibility of a fiscal year. If I could go back in time, I'd absolutely recommend making the election.

Just wanted to add that the Sec 645 election has implications for state taxes too, not just federal. Depending on what state you're in, there can be different rules for how estates and trusts are taxed. In my case (in Massachusetts), making the election saved us quite a bit on state taxes.

Has anyone dealt with making this election when there are multiple trusts involved? My parent's estate includes both a family trust and a marital trust that are now both irrevocable, and I'm confused about whether we can make one election for both or need separate elections.

I made the Sec 645 election when handling my father's trust last year, and one thing no one mentioned yet is the income tax rates. Estates can sometimes have more favorable tax brackets than trusts. For 2023, trusts hit the highest tax bracket (37%) at just $14,450 of income, while estates have more graduated brackets. If your trust has significant income, this alone could be a reason to make the election.

This is really helpful information from everyone. I'm dealing with a similar situation but with an added complication - my mother's trust has both traditional investments and a small business (sole proprietorship) that she was running before she passed. The business is still generating some income while I'm trying to wind it down. Does anyone know how the Sec 645 election affects business income taxation? I'm wondering if treating the trust as part of the estate would give me more flexibility in handling the business dissolution and any potential losses from closing it down. The business assets are probably worth about $75k but the timing of selling everything could really impact the tax consequences.

I went through this exact situation with my grandmother's trust earlier this year. With $450k in assets like yours, I'd strongly recommend making the Sec 645 election. Here's why it worked out well for us: The biggest benefit was the extended administration period - you get up to 2.5 years (until the second anniversary of death) versus the typical trust timeline. With investments and real estate, this extra time was crucial for making strategic decisions about when to sell assets for the best tax outcomes. For the vacation property specifically, the election gave us flexibility to time the sale in a way that minimized capital gains impact on beneficiaries. We were able to coordinate the timing with beneficiaries' other income to keep them in lower tax brackets. One thing to consider: make sure you understand the filing requirements. You'll need to file Form 8855 to make the election, and it must be filed by the due date (including extensions) of the estate's first Form 1041. Don't miss this deadline - it's irrevocable once the time passes. Given your asset level and mix of investments plus real property, the administrative flexibility alone probably makes the election worthwhile. The potential tax planning benefits are just a bonus.