A minor’s trust or children's trust is a trust that leaves property to a young person but in the care of a trustee until the young person reaches a designated age. This type of trust is often created through a will or living trust and is sometimes called a “testamentary trust” because it's created on the death of the will maker. A “2053(c) trust” is a specific type of minor’s trust that aims to avoid gift taxes. But to get the tax benefit, a 2053(c) trust must end—and the young person must receive all trust property—at age 21.
Why Create a Minor's Trust?
While children can inherit property, they can't manage it on their own while they're minors. So if you're leaving property to a minor—whether it's your own child or a niece, nephew, or friend's child—you'll also want to think about who will manage the property and for how long.
Even if the child is no longer a minor, you might still want to have a property management system in place. In most states, children are legally considered adults at 18 years of age, which many people consider to be still too young to manage a large sum of money on their own.
For these reasons, if you're leaving an inheritance to a child, you might want to consider a minor's trust. (Learn more about different property management options for leaving an inheritance to children.)
How a Minor's Trust Works
Trusts for minors are usually set up by parents or relatives who want to leave property to a young person but also want to name a trusted adult to care for the property until the child is old enough to be financially responsible. This type of minor's trust can be set up within a will or living trust. In the will or trust document, you leave the property to the young person, but you also include a provision that says if that person is still a minor when you die, you leave the property to a trustee who must care for the property until the child reaches the age you state.
The end date for the trust can be any age you want, but it's best not to have a child’s trust last too long. Age 18 is a minimum because children younger than age 18 can’t legally control their own property. A maximum is probably early to mid-30s. By then, a person is likely to be as mature as they're going to get. You also can design the trust to distribute portions of the trust property at different times. For instance, you can have the trustee give your children some of the trust assets when they reach age 20 and 25 and the remaining assets at age 30.
If you want to create a permanent or indefinite trust for a beneficiary of your will or living trust, this is a red flag that you don’t want the beneficiary to ever have the property outright. In that case, you might consider making a special needs trust or a spendthrift trust instead. See a lawyer for help with this.
When the maker of the will or trust dies, the minor’s trust is created according to the terms of the document. The trustee receives the property and cares for it until the young person reaches the specified age. You also can specify in the trust document how the trustee should use the trust funds to pay for the care and education of the young person until the specified age. When that time comes, the trustee will transfer property from the minor’s trust to the beneficiary outright—including any income the trust has produced.
2053(c) Trusts
A 2053(c) trust is a specific type of minor’s trust that aims to avoid gift taxes.
The federal government charges a gift tax but provides an exemption for gifts valued at $19,000 or less (as of 2025), per year, per recipient. (And if you're married, your spouse also has a separate $19,000 exemption, per year, per recipient.) Normally, this exemption only extends to gifts that are actually received by the recipient, so a gift that isn't distributed until a person reaches a certain age wouldn’t qualify. However, the IRS allows an exception (though IRS Code §2053(c)) that allows the $19,000 exemption to apply to gifts to minor's trusts if certain requirements are met. You can give up to $19,000 a year to a child's trust without incurring the gift tax if:
- the trust property and any income the trust makes can be spent for the child's benefit even before the child turns 21,
- the trust property and any income the trust makes are payable to the child upon the child turning 21, and
- if the child dies before turning 21, the trust property is payable to the child's estate or appointees.
The law’s requirement that the trust assets must be payable to the minor when they become 21 years old might be a concern or limitation for parents who don't believe that their child or loved one should inherit all of the trust property at that age. However, there are ways to extend the duration of the trust, and there are even ways to retain the tax benefits of the trust until a later age (combined with a Crummey trust). If you’re interested in avoiding gift taxes by using a 2503(c), see an experienced estate planning attorney or tax attorney for help.
How to Set Up a Trust for a Minor
If you're ready to get started with a trust for a child, look for an estate planning attorney near you. If you're interested in a 2053(c) trust, you'll definitely need an attorney. An estate planning lawyer can also help you explore your options if you're still not sure what type of property management is best for your situation.
If you want to create a basic minor's trust within a will or living trust, you can make your own will or living trust using WillMaker & Trust.
Questions for Your Attorney
- Can my wife and I each give money to my child’s 2503(c) trust? If so, how much can we give?
- I have land that's worth far more than $19,000. How can I give that to a minor’s trust but still take advantage of the IRC § 2503 gift tax exemption?
- Can I give money to my grandchild's minor’s trust without triggering gift tax? If so, how much can I give?