Hi and welcome to JA. I am Ray And will be the expert helping you today.
Here the annuity pays out side the trust to the named beneficiaries.If the beneficiary deceases then the it passes to any alternate beneficiaries.
If there are no alternate it passes to the estate
here not the trust.Unless the trust here is named as beneficiary no funds are paid to it.
You can gift anything you get paid into the trust you choose or you can gift it directly to the named persons.The federal gift limit is $,5,430,000 here.If you gift over $14k a year then it is reported on your taxes for informational purposes it is not taxes.Overall whoever you gift would not be taxed here if it is under the $5,430,00 lifetime amount.
Anyone receiving the annuity payments reports these as regular income and then if they gift over $14k it gets reported on your return as well.
Here is reference to the gift limits.
You can decide whether to gift the funds to the individuals or the trust.Tax wise it would not make any difference.
I appreciate the chance to help you tonight.Please let me know if you have more follow up.Thanks again.