The use of this irrevocable funded trust for gifts to minors eliminates many of the practical objections to outright gifts. For example, brokers are reluctant to deal in securities owned by minors. The non-tax characteristics include the fact that there are no restrictions as to the type of assets that may be transferred into this type of trust. The transfer to a 2503 trust must be irrevocable.
Income distribution is up to the discretion of the trustee.
It is permissible to provide that the trust will continue beyond the donee's 21 birthday, as long as anytime after reaching age 21, the donee can obtain the property in the trust at his or her whim. Some income tax characteristics if the income of the trust is distributed each year are that it is taxable to the recipient. To the extent income is accumulated, it will be taxed to the trust. The estate tax characteristics of property transferred will be excluded from the estate of the grantor, unless the grantor is trustee or successor trustee at the time of death.