Gifts in trust to minors are quite common, both as a means of building up a child's estate and as a way to minimize federal gift, income, and estate taxes payable by the trustor or the trustor's estate. A carefully drafted minor's trust can provide competent management of the property on the minor's behalf, while avoiding any problem of the minor's disability to act with respect to that property. Such a trust can effect substantial tax savings for the trustor-donor while regulating distribution of the trust income and principal in keeping with the needs of the minor.
A section 2503(c) Minor's Trust is a separate legal entity (a trust) established to hold gifts in trust for a child until the child reaches age 21. The trust is named after the section of the Internal Revenue Code upon which it is based.
Normally, for a gift to qualify for the annual gift tax exclusion, it must be a gift of a present interest. This means the recipient must be able to use the gift immediately. A gift of a future interest in some property (e.g., the right to the money when the child turns 21) would not normally qualify, except for section 2503(c) of the Internal Revenue Code. Section 2503(c) sets out the conditions under which a gift of a future interest to a minor qualifies for the gift tax exclusion.
Multiple Trusts for Children -- Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion is a type of trust that allows the donor to make a gift of money or other assets to a minor child without incurring any gift tax. This type of trust is set up in such a way that it qualifies for the annual gift tax exclusion, which allows for an individual to give up to $15,000 per year per recipient without paying any tax. There are two main types of Multiple Trusts for Children -- Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion: irrevocable and revocable. An irrevocable trust cannot be changed or revoked by the donor, and the assets put into the trust cannot be taken out. A revocable trust, on the other hand, can be changed or revoked by the donor and the assets can be taken out at any time. The trust agreement for Minor Qualifying for Annual Gift-Tax Exclusion must include the name of the donor, the name of the beneficiary (the minor child), and the terms and conditions of the trust. The trust should also specify who is responsible for the management of the trust assets, how the assets should be used (i.e., for the benefit of the minor child), and when the trust will terminate. In addition, the trust may contain provisions for the income and principal to be distributed to the minor child or to other beneficiaries at certain ages or upon certain events.
Multiple Trusts for Children -- Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion is a type of trust that allows the donor to make a gift of money or other assets to a minor child without incurring any gift tax. This type of trust is set up in such a way that it qualifies for the annual gift tax exclusion, which allows for an individual to give up to $15,000 per year per recipient without paying any tax. There are two main types of Multiple Trusts for Children -- Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion: irrevocable and revocable. An irrevocable trust cannot be changed or revoked by the donor, and the assets put into the trust cannot be taken out. A revocable trust, on the other hand, can be changed or revoked by the donor and the assets can be taken out at any time. The trust agreement for Minor Qualifying for Annual Gift-Tax Exclusion must include the name of the donor, the name of the beneficiary (the minor child), and the terms and conditions of the trust. The trust should also specify who is responsible for the management of the trust assets, how the assets should be used (i.e., for the benefit of the minor child), and when the trust will terminate. In addition, the trust may contain provisions for the income and principal to be distributed to the minor child or to other beneficiaries at certain ages or upon certain events.
