Are you worrying about after your death(s)? Or is the intent to set this up while you are alive for use while you are alive? If it is the former, you should have your basic estate planning done to handle this. If it the latter, it probably makes little sense to shift money to an account that will just be taxed at trust rates. I would sit down with an estate planning attorney and/or financial advisor to review your options but I believe you may be over-thinking things.
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website: http://www.stevenzelinger.com/
I think I will give you my "if it was me answer" instead of a legal answer.
I would keep the money in my name, maybe in a separate account, for
college expenses instead of transferring it to them or an Educational trust etc.
I would create a living trust and distribute the money to them at 25 but allow the trustee
to pay all college related costs of living expenses if you pass away.
This way you will always be in control of the money and also have a plan for their future.
The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.
I think you would be wise to meet with an estate planner. There are too many what ifs and variables that go into answering your question.
Depending on how much you are talking about, gifting them a monthly allowance at college may be more prudent, efficient and less expensive.
The general advice above does not constitute an attorney-client relationship: you haven't hired me or my firm or given me confidential information by posting on this public forum, and my answer on this public forum does not constitute attorney-client advice. IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. While I am licensed to practice in New York and California, I do not actively practice in New York. Regardless, nothing said should be deemed an opinion of law of any state. All readers need to do their own research or pay an attorney for a legal opinion if one is necessary or desired.
You can get a living trust or educational trust drafted and started for about $1000.00 or even less. Choosing what kind of trust to use is up to you. There are some differences which effect taxes but the decisions are relatively simple, as is the process. I notice you are in Sammamish, feel free to give me a call. You can get my contact info through "Find a Lawyer" on this site.