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

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

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.