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Tampa Estate Planning > Tampa Trust Attorney > Section 2503(c) Trusts

Tampa Section 2503 Trusts Attorney

Tampa 2503(c) Trusts

With the average costs of living and education increasing almost annually, many parents are now creating trusts to provide for their child’s financial future. Of course, there are a wide variety of financial savings or trust accounts that can benefit your child. One particularly useful trust is known as a Section 2503(c) trust. This type of trust allows you to put assets aside as a future gift for your child. Generally, your child will receive the trust gift when they reach the age of 21. You may also be able to use trust assets to pay for college or other educational expenses. There are many advantages to this type of trust, including tax advantages for you. If you live in Tampa and want to learn more about how a 2503(c) trust can help you secure your family’s financial future, contact David Toback, Attorney at Law today.

Creating a Section 2503(c) Trust

The law defines certain requirements that make a 2503(c) trust valid. The IRS lists four main requirements for these trusts:

  • Trust assets may be used by the child or for their benefit before they reach the age of 21;
  • If the child does not live to age 21, all trust assets will be included in their estate;
  • All undistributed trust assets must go the child at the time they turn 21 years old; and
  • Gifts to the trust are irrevocable.

Because trust assets can be used for your child’s benefit prior to them turning 21, the trustee can actually use a 2503(c) to pay their college expenses. Usually, parents serve as the trustee of these types of trusts, since you know what your child’s needs are. Whoever serves as trustee can also use trust assets to make investments and attempt to add to the trust amount. With wise investments, a 2503(c) trust can provide a substantial gift to your child at a critical time in their lives.

Gift Tax Benefits

Generally, you can claim an annual tax exemption for gifts up to $1,000. Often, gifts between family members fall under this exception because gifts are usually immediately available for the recipient’s benefit. In fact, it is a requirement of the gift tax exemption that the recipient can use your gift immediately. This is called a “present interest.” However, you can also claim the gift tax exclusion through your contribution to a 2503(c) trust. Creating and contributing to this type trust can allow you to take advantage of the gift tax exclusion, and potentially lower your tax bill.

Call Reputable Tampa Trusts Lawyer

There are many benefits to be had through the creation of a 2503(c) trust. Not only can you provide some stability to your child’s financial future, you can also claim a tax advantage. As with any trust or tax matter, the applicable law can be quite complicated. For over 17 years, David Toback has helped Tampa residents plan their estates and creates beneficial trusts. He will give you practical, honest legal advice about how a trust can help you meet your financial goals. Call David Toback at (813) 231-6036 and schedule a consultation today.

 

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