Grandmother died, left CD in "In trust for"

[mbx5]

Pennsylvania...


My grandmother died and left a CD "in trust for" me.
My family is "forcing" me to divide this CD between myself, my sister, and my brother....

My question is - will I owe some type of tax whether it is inheritance or income tax, or some estate tax on this whole amount? Or maybe just owe tax on the interest the CD has made for the year?

Please help asap - I am trying to get my taxes done and my CPA can't even tell me what to do...???

Thanks!
mbx5

 

[Rhubarb297]

Pennsylvania...


My grandmother died and left a CD "in trust for" me.
My family is "forcing" me to divide this CD between myself, my sister, and my brother....

My question is - will I owe some type of tax whether it is inheritance or income tax, or some estate tax on this whole amount? Or maybe just owe tax on the interest the CD has made for the year?

Please help asap - I am trying to get my taxes done and my CPA can't even tell me what to do...???

Thanks!
mbx5

Wow ... you really need a new CPA. That should be a basic question for a CPA. So you had a tax professional and he can't give you answers, so you're going to this forum of non-experts, mostly laypeople for advice? That may not be a wise move.

Not a tax expert. Regarding the CD, you could owe state inheritance or state estate tax. There's no way of knowing that without being aquainted with your state's particular laws. Indiana's inheritance tax laws are very confusing and depend on the particular relation the beneficiary is to the decedent. Is this a big CD?

If it's a really, really big CD you could owe federal estate tax. I doubt your CD though is in the $1 mill. range.

You probably would owe income tax on the interest on the CD. Not sure how that works when grandmother holds the CD in trust for grandson but then dies before the end of the year.

Really, look into getting a new CPA. This wouldn't be a difficult question for someone who has experties in the area.

 

[anteater]

1) PA inheritance tax is owed. As a lineal descendant, the rate of tax is 4.5%. Whether Federal or Pennsylvania estate tax is owed depends upon the size of the taxable estate. Unless you are talking about an estate over $1.5M, estate tax is not a problem.

2) Whether you have to pay the inheritance tax depends upon how the will was worded regarding payment of inheritance/estate taxes. Many wills have a clause concerning inheritance/estate taxes, stating whether the taxes will be paid by the estate or by individual beneficiaries. If the will is silent on the matter, since this is a non-probate asset, you would have to pay the inheritance tax. You should be asking the executor of the estate what the will says.

3) What your family is "forcing" you to do is irrelevant. From a legal standpoint, you are the owner. If you give your brother and sister part of the proceeds, that is a gift from you to them.