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Generally if the trust transfers the money of a property to the beneficiary - that transaction is a distribution and not a gift. The gift is defined as - A voluntary transfer of property from one person or entity to another made without charge or consideration. - http://www.lectlaw.com/def/g007.htmSo - as long as trust's documents allow gifts - the trustee could make gifts to any person including beneficiaries. However - I do not see any tax advantages if you structure the transaction as a gift and not as a distribution.