Cashing in kid's trust funds

[sogwap]

Texas

Things are a little tough (as for many people), my kid is 17 and I can't buy him a car or afford the insurance. Both my kids, the 17 year old and my younger one almost 16 have mutual funds. Both want to give it to me to help ends meet. I just want to buy my oldest a car and pay some of the insurance for him. He's such a great kid. He got his lifeguard certification and works whenever he can. It's hard for both of us because I have to drive him to work so I have to miss some once in a while and lose hours. Anyway, I don't know the penalty for cashing those things in early. I seem to remember 40%. But I really have no clue. Does anyone know what I would have to pay in taxes or whatever is involved if I cashed in a trust mutual fund?

Thanks

 

[LdiJ]

Texas

Things are a little tough (as for many people), my kid is 17 and I can't buy him a car or afford the insurance. Both my kids, the 17 year old and my younger one almost 16 have mutual funds. Both want to give it to me to help ends meet. I just want to buy my oldest a car and pay some of the insurance for him. He's such a great kid. He got his lifeguard certification and works whenever he can. It's hard for both of us because I have to drive him to work so I have to miss some once in a while and lose hours. Anyway, I don't know the penalty for cashing those things in early. I seem to remember 40%. But I really have no clue. Does anyone know what I would have to pay in taxes or whatever is involved if I cashed in a trust mutual fund?

Thanks

The first question that we have to ask is if they are actual trust funds (with their own EIN number and trust documents) or are these simply mutual funds held as: Jane Doe in trust for Steve Doe?

If they are actual trusts, you will need the advice of a tax professional who can actually read over the trust documents.

If its not an actual trust, then normal tax rates are going to apply, which are unlikely (even including state tax) to be as high as 40%, and may not have much of any tax implication depending on any losses and gains when sold, but you will have kiddie tax issues to deal with, so you will again likely need the help of a professional.