Chapter 6 - § 6.7 • NON-TAX CONSIDERATIONS

• Jurisdiction: Colorado

§ 6.7 • NON-TAX CONSIDERATIONS

§ 6.7.1—Gifts to Minors

An unqualified and unrestricted gift to a minor is deemed a gift of a present interest for gift tax purposes, and is entitled to the annual exclusion under I.R.C. § 2503(b). A material disadvantage, however, is that a minor is considered "disabled" for purposes of transacting with his or her property. In the absence of advance planning, the problem of transferring title to assets to a minor usually is solved by the appointment of a conservator, but this procedure is cumbersome, expensive, and to be avoided. See generally §§ 9.2 and 9.3 of this Handbook.

A better solution, when possible, is to create a vehicle to hold the gifts to the minor, ranging from a "minor's trust" under I.R.C. § 2503 to a custodial account under the Colorado Uniform Transfers to Minors Act, an I.R.C. § 529 education plan, or purchasing a commercial annuity, among other ideas. See § 6.8.2 of this chapter.

§ 6.7.2—Loss to Donor

The tax savings available by making...