Gifts in trust usually do not qualify for the annual gift tax exclusion unless the beneficiary has a right to withdraw the funds. Under Section 1503(c) of the Internal Revenue Code the annual exclusion can be had without withdrawal rights. There must be a single beneficiary. The funds must be available for withdrawal by the child at age 21. The trustee must have unrestricted discretion to distribution principal and income for the benefit of the beneficiary.

If the trust continues after the beneficiary reaches 21, the gift tax annual exclusions are no longer available.

Contact Chicago probate and Estate Planning Lawyer Donald Thompson to learn more:

55. W. Monroe – #3950
Chicago, IL 60603
Phone: 312-782-0844
Fax: 312-201-1436
Email: donthompsonlaw@sbcglobal.net