Types of Trusts and Their Tax Treatment

  • 1- Cash contributions may be made to the trust, to be used by the trustee to make premium payments on the life insurance
  • policy. Careful drafting of the trust document is required to qualify the cash gifts for the annual gift tax exclusion.
  • 2 - The annual gift tax exclusion ($15,000 in 2018) is indexed for inflation in increments of $1,000.
  • 3 - Under federal law, the minor must become the owner of the assets no later than age 21.