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Q.What is a Minor's Trust?
A.A Minor's Trust is another option to gift children money, but it requires a trustee to keep detailed records and to file annual trust tax returns. A bit much for a relatively small gift. However, if multiple gifts are planned in consecutive years, you may opt to form a 2503(c) Minor's Trust. A Minor's Trust allows assets to be held for the child, even after the child turns 21. In fact, the Minor's Trust can be set to last until the child turns 25, 30 or even older which will enable the named trustee to prevent the child from foolishly spending the money. To avoid adverse tax consequences, however, a person other than the donor should be appointed Trustee (Manager). The Trustee should have full investment authority and the authority to spend for the health, education, and support of the child. When the child reaches whatever age you specify in the Minor's Trust document, the child gets the assets without any further supervision. Although a Minor's Trust is more expensive than an UTMA gift, it can last longer.
Gifts into a Minor's Trust are irrevocable-- once given, you can't take it back.
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