Phil Marti <prm20871[at]verizon.net> wrote:
- quote -

I agree.

- quote -

For the younger son, it's already in a trust, as defined by
the <state> Uniform Gifts to Minors Act.

- quote -

If X transfers to a trust where X is the beneficiary,
there's no gift involved.

Seth

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Geoff wrote:

- quote -

First, how do you propose to steal the 19 year old's money?
If it's in his name, you can't just change it to a trust. I
don't think the deal for the 13 year old is any better. UGMA
means the money is his at 18. I am unaware of any legal way
to change the titling to restrict access further. I think
that ship has sailed.

If this was done properly, the money would have gone to the
trust instead of to any UGMA. Then, the two trusts would
have a tax return if only to document their income which
should be passed to the beneficiaries through form K-1.
Retaining earnings within the trust can be very expensive,
trust's tax brackets are not the same as individuals.

JOE

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kastnna <kastnna[at]auburnalum.org> wrote:

- quote -

That's usually the case. However in this case if the kids
transfer money belonging to them into trusts for themselves,
there's probably no gift because you can't make a gift to
yourself.

- quote -

Non-grantor trusts do. Grantor trusts do not. Uniform Gift
to Minors Act trusts are grantor trusts and their income is
taxable to the minor. Other kinds of irrevocable trusts can
also be set up to be grantor trusts, such that their income
will be taxed to the child or the parent.

- quote -

Maybe Steve Jobs' attorney can help him backdate the
documents.

Stu

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"Geoff" <Ge...[at]yahoo.com> wrote:

- quote -

Keep two things in mind:
1. You can't make your 19 year old son do anything with the
money? Its his! Now I'm well aware of the power of "parental
persuasion" but you can't force it.

2. Under UGMA rules, the custodian/trustee has a fiduciary
duty to act in the minors best interest. I'm not implying
that you aren't, just remember who's interest you are
serving.

That aside, putting the assets in trusts will constitute
gifts to the trusts on behalf of the sons. There may be
numerous gift tax repercussions depending on currently
unknown details of the situation. Annual gift exclusions may
be used (not a big deal) and some or all of the unified
credit may be consumed (possibly a bigger deal).

Trust do file returns, FYI.

There's no use crying over spilled milk (it sounds like it
was out of your hands anyway), but this situation is exactly
why we plan beforehand, not after-the-fact.

--kastnna

"Learning from the mistakes of others is usually much easier
than learning from your own"

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"Geoff" <Geoff[at]yahoo.com> wrote:

- quote -

The 19yr old can legally spend funds in his/her name as they
please & you have no say. That is the primary reason for
placing these assets in an entity such as a trust.

You will need an attorney to properly draft the trust
document. The trust will have to file its own tax return.
Tax implications vary, depending on how the trust is
structured. Sometimes state issues influence how these
entities are structured.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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"Geoff" <Geoff[at]yahoo.com> wrote:

- quote -

With the 19 year old that can't be done. He is technically
an adult and in control of his own money, and you can't
change that.

With the 13 year old a gift to minor's trust allows you to
keep it out of his control until he is 18.

It would have been possible to have created a trust that
does not terminate when the child turns 18, but that would
have had to be done before the first gift was made. It's
too late now, except unless you want to set up a new trust
for the younger child, and only put new funds into it. You
can't legally take anything from the Minor's Trust and put
it into a trust that keeps it away from him past 18.

- quote -

A gift to minor's trust is not a separate tax paying entity.
All income (and deductions) of the trust are reported on
the minor's tax return.

As for a trust that would have kept property under your
control until after the kids turned 18, it could be set up
so that income is taxed to the parent, to the child, or to
the trust as a separate tax paying entity, depending on your
intent and how it is drafted.

Stu

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"Geoff" <Geoff[at]yahoo.com> wrote:

- quote -

Trust accounts have to file separate tax returns (Form 1041,
not 1040). Depeding on the terms of the trust document, the
income may be taxable to either the trust or the
beneficiary. (The preceding sentence is a gross
oversimplification.)

The bigger problem is the legal one. *You* cannot move money
from a UGMA account to a trust since *you* are not the owner
of those funds - the child is. You can, however, direct any
future gifts/transfers to the children into a trust.

Ira Smilovitz

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"Geoff" <Geoff[at]yahoo.com> wrote:

- quote -

Recommended by whom? Sounds like one of the worst ideas
I've seen come down the pike in a while.

Regardless of whether it's a good idea, we're talking about
the sons' money. For the elder son, it would require his
consent and action. I'm not sure whether the custodian of
the younger's account has the authority to do this or not.
This is more a legal than a tax question.

- quote -

The transfer to the trust is a gift. If the amount exceeds
$12,000 the transferor must file a gift tax return and use
some of the unified credit.

- quote -

For the type of trust you're talking about the trust has its
own filing requirement. It also has a small exemption and
steep rates. Take a look at the instructions for Form 1041
to get an idea.

--
Phil Marti
Clarksburg, MD

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My two sons have reasonably large investment accounts. The
19 yo is in his own name, the 13 yo is under the gift to
minors act. It was recommended that they both be changed to
trust accounts so they don't have access to the money until
they are older.

What are the tax implications? Do the trust and the
individual file separate tax returns, or are they
consolidated? Any other issued to be concerned about?

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