Closing Out "In Trust For" Savings Account ? (Sr. Citizen Question, Please)

[Bob]

Hello,

In my 80's now, so please bear with me a bit.

Many, many, years ago we opened up a savings bank account labeled
"In Trust For" my son.

Simple CD, which we've been renewing, automatically, over the years for
continual 12 month renewals.

My S.S. number, and we've been paying the taxes on the interest.

Want to get my son the $ in it now.

How do we go about this please ?

Does that $14,000 (no tax) limit apply ?

Are there "any" tax implications for us or him, if we just close out the
account and give him the $ in it ?

What's the best way of giving him the $, or transferring ownership
of this account to him, or...?

Much thanks,

Appreciate the help and advice,
Bob

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[Bob Sandler]

>In my 80's now, so please bear with me a bit.
>Many, many, years ago we opened up a savings bank account labeled
>"In Trust For" my son.
>Simple CD, which we've been renewing, automatically, over the years for
>continual 12 month renewals.
>My S.S. number, and we've been paying the taxes on the interest.
>Want to get my son the $ in it now.
>How do we go about this please ?
>Does that $14,000 (no tax) limit apply ?
>Are there "any" tax implications for us or him, if we just close out the
>account and give him the $ in it ?
>What's the best way of giving him the $, or transferring ownership
>of this account to him, or...?

The money is yours. "In trust for" just means that it will
go to your son if you die. If you close the account and give
him the money, or transfer ownership of the account to him,
it is a gift and is subject to the gift tax rules.

The $14,000 limit is not "no tax," it's no gift tax return.
If you give more than $14,000 to one person, you (the giver)
have to file a gift tax return. You won't actually have to
pay any gift tax unless your total lifetime gifts to
everyone are over about $5.4 million, but you have to file
the return. The reported gift will reduce your estate tax
exclusion.

Who are "we"? If you are married, you and your wife can each
give separate gifts of up to $14,000 without having to file
a gift tax return. If you make a joint gift of more than
$14,000 you would have to file a gift tax return to split
the gift, so if the total is between $14,000 and $28,000
it's better to make separate gifts, just to avoid the
paperwork.

In any case, a gift of any amount is not taxable income to
the person receiving the gift, and he does not even show it
on his tax return.

Probably the simplest thing to do is to wait until the next
time the CD is due for renewal, and just close the account
and give the money to your son. Or you could ask the bank if
you can transfer ownership of the account to your son.

Bob Sandler

[Stuart O. Bronstein]

Bob Sandler <bob_u...@yahoo.com> wrote:

>>In my 80's now, so please bear with me a bit.
>>Many, many, years ago we opened up a savings bank account labeled
>>"In Trust For" my son.
>>Simple CD, which we've been renewing, automatically, over the
>>years for continual 12 month renewals.
>>My S.S. number, and we've been paying the taxes on the interest.
>>Want to get my son the $ in it now.
>>How do we go about this please ?
>>Does that $14,000 (no tax) limit apply ?
>>Are there "any" tax implications for us or him, if we just close
>>out the account and give him the $ in it ?
>>What's the best way of giving him the $, or transferring ownership
>>of this account to him, or...?
>
> The money is yours. "In trust for" just means that it will
> go to your son if you die. If you close the account and give
> him the money, or transfer ownership of the account to him,
> it is a gift and is subject to the gift tax rules.

I disagree. The specific status may depend on state law, but in
general "in trust for" means that you have made a completed gift, and
are holding the funds for the other person, as a trustee. It may be
considered a grantor trust, so the donor is properly taxed on any
interest. But the gift is not revocable.

The kind of account you are talking about is one where you name
another person as a beneficiary. You can change that any time you
want, and you have not made a gift at all.

Aside from that, I agree with what yo wrote.

--
Stu
http://DownToEarthLawyer.com