There is a yearly exclusion from gift tax of $11,000 per year per donee in 2003 (the amount rises periodically). This applies only to gifts of present interests. A gift in trust is not considered a present interest. For instance there is a gift in trust if you give money to a trustee to hold and pay the income to grandchildren each year until the youngest reaches 25 when all the rest of the trust assets are distributed to them. Since the grandchildren cannot get the trust assets presently, this is not considered a present gift.

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