Indiana General Form of Trust Agreement for Minor Qualifying for Annual Gift Tax Exclusion
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How to fill out General Form Of Trust Agreement For Minor Qualifying For Annual Gift Tax Exclusion?
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FAQ
The trust allows the trustee to gift from the trust to the current beneficiary's issue up to the annual gift exclusion (currently $15K).
Gifts in trust do not qualify for the annual exclusion unless the trust either qualifies as a Minor's Trust under Internal Revenue Code Section 2503(c) or has certain temporary withdrawal powers called Crummey powers.
A 2503(c) trust, or minor's trust, is a trust established to hold gifts for one child until he or she attains age 21. A gift to this type of trust qualifies for the annual federal gift tax exclusion.
The IRS does not levy gift taxes on trusts, nor does it consider payments from the trust to a beneficiary as a gift (it may be taxable income to the beneficiary, however).
Gifts to Beneficiary You control the amount and timing of these gifts through the terms of the trust. The trust can limit annual gifts to a younger beneficiary, for example, or to a beneficiary who may be careless with money.
A gift in trust is a way to avoid taxes on gifts that exceed the annual gift tax exclusion amount. One type of gift in trust is a Crummey trust, which allows gifts to be given for a specific period, establishing the gifts as a present interest and eligible for the gift tax exclusion.
Gifts in trust do not qualify for the annual exclusion unless the trust either qualifies as a Minor's Trust under Internal Revenue Code Section 2503(c) or has certain temporary withdrawal powers called Crummey powers.
The beneficiary's trustee can pay the child's college expenses from the 2503(c) until the minor turns 21. The trustee has to be someone other than the grantor, such as the grantor's spouse or family member.
The key difference between a 2503(c) trust and a 2503(b) trust is the distribution requirement. Parents who are concerned about providing a child or other beneficiary with access to trust funds at age 21 might be better off with a 2503(b), since there is no requirement for access at age 21.
