Tampa Section 2503 Trust Attorney

If you are a parent, one of your key estate planning goals is likely providing for your child’s financial future. If your children are still minors, you may be especially interested in setting aside money for their college education. There are a number of legal tools that can help you achieve this goal, including setting up a Section 2503 trust.

Also known as a “minor’s trust,” a Section 2503 trust lets you set aside money for a child or grandchild while retaining certain tax benefits. A qualified Tampa Section 2503 trust attorney can explain the process to you in greater detail. Knudsen Law is a full-service Florida estate and probate firm that assists clients in finding the right financial planning strategies for their family, which may include the use of minor’s trusts.

How Does a Section 2503 Trust in Florida Actually Work?

Section 2503 refers to a section of the Internal Revenue Code. More specifically, Section 2503(c) governs the establishment of irrevocable trusts for the benefit of a minor (i.e., a person under the age of 21). Essentially, you can make a gift of cash or other assets to a minor through a Section 2503(c) trust under the following conditions:

• The trust is irrevocable, meaning you cannot amend its terms once established.
• The trustee has discretion to use the money in the trust for the benefit of the minor.
• When the minor turns 21, they have the right to withdraw all of the assets from the trust.
• If the minor dies before reaching the age of 21, the trustee must pay over any remaining assets in the trust to the minor’s estate.

From a tax standpoint, one benefit of a Section 2503(c) trust is that the grantor–the person creating the trust–can claim a federal gift tax exclusion for any contributions to the trust. Normally, the gift tax exclusion only covers “present interest” gifts, i.e., gifts that the recipient can access right away. But money contributed to a Section 2503(c) trust can enjoy this exclusion throughout the life of the trust, or at least until the beneficiary turns 21.

It is also important to note that the trust itself is not tax-free. The trustee must file annual tax returns for the trust. The grantor is usually responsible for paying any taxes for income that accrue inside of the trust, while the beneficiary (child) is responsible for any taxes due on distributions from the trust.

Our Tampa Section 2503 Trust Attorney Can Help

A Section 2503(c) trust is just one of many available options when it comes to estate planning that can benefit your children, grandchildren, and other minor beneficiaries. Our Tampa Section 2503 trusts attorney is happy to sit down with you and review all of your options. And if you decide this type of trust is right for your family’s situation, we can walk you through the steps of properly establishing and administering such trusts. To get things started, contact Knudsen Law today at (727) 398-3600 to schedule a consultation.