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Home >> Accounts >> Trusts
Dealing with ITF Accounts
As executor for my mom's estate, I will be opening $9,000 ITF accounts for three minor relatives. Since I will be trustee, will I have to declare the income on my fed/state taxes, or do I have to file separate returns for each ITF account?
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 First, consider the goal of setting up the accounts. If the funds are to be owned by the minors, but under the control of an adult until they are of age, why not consider whether setting the accounts up under your state's Uniform Transfers to Minors Act (UTMA) might be preferable? UTMA accounts, while under the control of a custodian, are beneficially owned by a minor, and the income is taxable to the minor, not the custodian. The custodian is obliged to give the funds to the minor or spend them only for the minor's benefit, and surrender the balance of the account to the minor at an age that depends on state law variations (from 18 to 21).
Contrast that with an ITF (in trust for) account, which is legally the property of the account owner and for which income is taxable to the owner. Depending on the amounts of money involved, check with a tax advisor to determine whether either option presents a better tax scenario for you and the minors.
Published on BankingQuestions.com 7/28/10
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