What Happens When Grantor of Revocable Trust LLP Partner Dies?
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Question:
In a small business LLP, can a Partnership issue K-1’s in name and Social Security number of the Trustee or must it be in name of the Trust, if the Trust is listed as a Limited Partner? And do the LLP documents have to be amended to reflect that the Trust (Limited Partner) has now become irrevocable and the K-1’s issued in the new EIN?
Response:
The K-1s must be listed in the name of the trust using the trust’s tax identification number (EIN). This can get a bit confusing because the distributions to the trust may go to the trustee in their role as trustee, for instance to “John Doe, as Trustee of The Sally Smith Trust.” But you would still use the trust EIN. It can also be confusing because revocable trusts typically use the grantor-trustee’s Social Security number, so while the trust is revocable issuing the K-1 to the Social Security number is not a problem.
Based on what you have written, it sounds like the grantor passed away, which is why the trust became irrevocable and the trust had to get a separate EIN or tax ID number. I don’t see any reason to amend the LLP. The trust is still the same trust even if it’s now irrevocable and may have different beneficiaries.
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