Trust for Minors
		A Minor's Trust may be an advantageous technique for transferring assets to your children and thereby reducing your estate tax liability.  The value of any property transferred to a Minor's Trust is eligible for the $10,000 gift tax annual exclusion.  Thus, parents could pass up to $20,000 of their estate to a Minor's Trust for each of their minor children.  Even though California defines the term "minor" as any person under age 18, a Minor's Trust may be established and continue to exist for a beneficiary who is 18 or older but who has not reached the age 21.  With careful planning and under certain circumstances, the Minor's Trust you set up for your child may continue to exist until any age you specify in that Trust.  (e.g., until your children are 25 or older) A Minor's Trust must meet several requirements to qualify: First, the trustee must be able to distribute any income or principal of the Trust for the benefit of the minors without "substantial restrictions."  For instance you could specify in that Trust that the Trustee may distribute any funds for the "support, care, education, comfort, and welfare" of your children.  If you have more than one child, you should either have a separate Minor's Trust for each child or the Trust must provide for a separate share for each beneficiary. Second, any property not spent for the minor must pass to him or her at or before the age 21.  However, Internal Revenue Service has held that a trust that is not terminated when the beneficiary reaches 21 may still qualify, if either (1) upon reaching age 21 the beneficiary is given at least one opportunity (which may be limited to a short time period) to terminate the trust, or (2) after reaching age 21 the beneficiary gets a continuing right to terminate the trust. Third, the Minor's Trust must provide that in the event of the minor's death the trust property must be payable to minor's estate or be subject to minor's general power of appointment (e.g., trust propery be subject to minor's will). Estate Taxes - If the parents do not act as trustee and they do not retain the power to appoint certain successor trustees, then assets of a Minor's Trust generally are not included in the parent's gross estate and not subject to estate tax on the parents' death, except under certain circumstances. Income Taxes -  If the minor child is under the age of 14 and one of the parents is still alive, the minor's net income will be taxed at the parent's higher marginal rate.  Different rates may apply under other circumstances.  For instance, the beneficiary will be taxed on income of a trust which continues to exist after beneficiary is 21 years or older..
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