Home > Services > Trust and Estate Planning > Sub Trusts > 2503(b) Family Care Trust

2503(b) Family Care Trust

The IRC 2503(b) / Family Care Trust (FCT) is a way for taxpayers to utilize the annual exclusion rules

The IRC 2503(b) / Family Care Trust (FCT) is a way for taxpayers for making gifts to family members while maintaining control of the gifts to the extent desired. The FCT functions as a sub-trust of an RLT, and would have the same beneficiaries as those identified in the revocable portion of the RLT. Certain administrative rules must be followed, however, to ensure the optimal tax benefits. Utilizing the annual exclusion allowances, a taxpayer/donor can transfer up to $12,000 per year / per donee. A married couple can “split gifts” and together transfer up to $24,000 per year / per donee. This means that, under current (2007) federal tax law, a married couple with four children (for example) could transfer $96,000 each year to the FCT without incurring a gift/transfer tax liability.

If annual exclusion gifts are made to the FCT for the benefit of a minor then all income generated from the gifts must be distributed at least annually to the minor or to a Uniform Gifts to Minors Act (UGMA) account for the benefit of the minor. Unlike the rules that apply to an IRC 2503(c) Trust, the 2503(b) FCT does not have to distribute the gifted principal to the minor when the minor obtains the age of 21. In fact, the gifted assets can remain in trust for as long as the grantor directs through the terms of the trust.

If the FCT beneficiary has obtained the age of 21 and the grantor still wishes to make “annual exclusion” gifts to the trust, then the trustee of the FCT must notify the beneficiary of his/her right to withdraw the gifted amount(s). If the beneficiary allows his right to withdraw to lapse (usually after 30 days) then the gifted amount becomes a part of the FCT, and shall then be controlled and administered under the terms of the FCT. The income generated from the annual exclusion gifted amount does not have to be distributed outright to the beneficiary – assuming that the beneficiary was at least 21 years old when the gift was made – but any undistributed income would be taxed to the trust.

If the grantor(s) wants to make gifts exceeding the annual exclusion amount and/or not have the annual exclusion gifts subject to withdrawal by the beneficiary(s) of the FCT, then to the extent of the value of the gift(s) – not offset by the exclusion – a gift tax liability would occur. However, gift tax liabilities can be offset by taking a portion of the federal Gift Tax Credit (having an exemption equivalent amount of $1,000,000) against the gift tax.

Recommended Products

Generation Skipping Dynasty Trust $900
Although the Generation Skipping Tax (GST) is a transfer tax, it should not be confused with the terms normally associated with estate tax.

Certified Wealth Preservation Planner Course, CWPP $1300
A Certification that Gives High Net Worth Clients the Confidence to Deal with You!

Life Partners Trust - Co Grantor Revocable Living Trust $1995
This is a revocable living trust for an unmarried couple wanting to avoid probate and control their assets upon passing.

Need Assistance with 2503(b) Family Care Trust?

Talk Now with a Certified Live Advisor Call Toll Free (888) 435-6030 OR (212) 671-1188

...Or simply fill out the FREE form below and an Advisor will contact you immediately


First Name:	Last Name:	Occupation:


Phone #:	Email:

Advisor Protection Blogs

China Tax Roundup: Real Estate, Social Security, and Mooncakes

BY Laurence E. Lipsher - Foreign Affairs

Second Passport

BY Michael B. Nelson, Esq - Foreign Affairs

Most Popular Blog Topics

From Our Affiliates

rss feed

Trust and Estate Planning:

Subscribe Newsletter

Wealth Preservation

JAN 01

Asset Protection Risk Analysis

Online

Take the risk analysis to find out your exposure to creditors and litigators. Isn't it worth 5 minutes to find out how much risk you really safe?

Advanced Seating - More Details

Best-Selling Strategy Guide

The Doctor's Guide to Wealth Preservation

$49.95

One attitude that cannot be tolerated in medicine is a lack of care or apathy. We feel physicians should exercise the same standard of care toward their accumulation of assets, property and wealth.

Written by the foremost expert in the country!

Physicians and their Advisors Will Gain a Practical Guide in the Following Subject Areas

►Asset Protection

►Estate Planning

►Income Tax Reduction

►Financial Planning

►Office Management

►Corporate Structure and Protection Structures

Learn how to protect your personal and business assets from disgruntled patients, creditors and divorce through the use of domestic and offshore planning tools.

Estate Planning - Learn how to avoid the most common estate planning mistakes that could cost your heirs $500,000 - $3,000,000 or more and learn how to avoid the 70-83% tax trap.

Income Tax Reduction - Learn how to reduce your income taxes by $25,000 - $200,000 annually while avoiding the tax avoidance shams in the marketplace.

Financial Planning - Learn how to protect the principal of your investments while still giving yourself the opportunity for upside growth if the stock market performs well.

Office Management - Learn several practical and easy to implement solutions that will help you run a more efficient and financially sound medical practice.

Add to Cart - More Details

Popular Courses Modules

Asset Protection Planning I

downloadable PDF Course

Asset Protection Planning Part 3 concentrates on the protection of personal residence, business acco ...

Course Details

Captive Insurance Companies

3 Weeks Course

Would you like to remove a dollar from your company, and even better, a tax deductable dollar and pu ...