Skip to main content

How is a savings account taxed when it's set up "in trust for" a beneficiary?

Pittsburgh, PA |
Attorney answers 2


The better question is to determine what you are trying to accomplish. In all events, the income will be taxed by someone - either the person who put the money in the account, the trust or the beneficiary.

Adding the beneficiary as a co-owner gives the beneficiary (and his or her creditors) total access to the account. Is this what you were trying to accomplish? If not, then take a different approach.

It sounds like you need to consult with an experienced estate planning attorney to help explain your options.


Since this is posed as an estate planning question, I assume you mean which gives you a better estate tax result. I assume your estate is less than 3.5 million, so federal estate taxes are not an issue. For PA. Inheritance Taxes (PIT), joint accounts established more than one year before death are taxed based on the percentage ownership of the decedent. So a joint account would be only taxed 1/2 for PIT purposes. So joint tenancy would be preferable to an ITF account since the latter would be fully taxable.

Hope this helps.

Mr. Fromm is licensed to practice law in PA. The response herein is not legal advice and does not create an attorney/ client relationship. The response is only in the form of legal education and is intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received.
By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.
Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer