You can make gifts while you are alive, or upon your death. Either way, you can make gifts outright or in a manner that restricts use.
Making gifts while alive does not always save taxes later. If you do make lifetime gifts, do not give away more than you can afford, because once it is given, you cannot take it back.
Gifts made during lifetime are subject to gift tax if they exceed the $14,000 cumulative annual gift tax exemption per recipient ($28,000 for married couples). Annual gifts that exceed the exemption are subject to gift tax, requiring a gift tax return. If the return shows a taxable gift, that counts against your estate tax exemption. If you die with less than the estate tax exemption ($5.34 million), no tax is ever due. If you die with a taxable estate, the taxable gift reduces the estate tax exemption.
When making a gift during lifetime, certain types of gifts do not count against the gift tax exemption.One can pay certain medical, dental or tuition expenses directly to a provider without reducing the gift tax allowance. You can also set up certain approved education accounts that are not taxable gifts.
Be careful in opening ITF bank accounts of trust for minor accounts, as the account might belong to the younger person immediately, or at the age of eighteen. Also, if the designated owner of UGTMA dies, then probate may be required to designate a new owner.
Whether you make a gift during lifetime, or make it after death, you can make it subject to a trust in order to protect the beneficiary for a period of time. It is more expensive to do that during lifetime, because it would be an irrevocable trust. This is usually only done when one has a taxable estate.After death, you can make a continuing trust inside a will, or inside a trust.