It allows you to give away money and yet not actually let them have NOW and get the gift tax-exclusion. Trusts are flexible. You can hold virtually ALL types of assets in Trust, not just cash, mutual funds and stocks. You can also put any number of provisions in the trust documents. For example, you could set-up both a trust and a custodial account.
Trusts are more expensive than regular custodial accounts which are cost-free.
In addition, there are ongoing expenses for trust administration and tax-return preparation as well, so all this must be considered before creating one. Gift-tax rules always apply to Trusts as well. This information is NOT meant to be taken as Legal advice. I am NOT an attorney and this is NOT be be mistaken for giving legal advice. I am merely providing information that has been provided to me from several legal sources and adding my own comments to that information for a better understanding.