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I'll answer some of the question, to give the experts more time to focus on the hard bits.

You can give your nephew $11,000 per year.
You can also give his mother and father each $11,000 per year.
Anyone else can do the same (so if you have a spouse you could give a total of $66,000.)

That money is without tax consequence -- in other words it's the same as if you had spent it on socks. You have no tax effect and they have no tax effect.

You can pay any amount of medical bills directly with no tax effect (except possibly cost his parents the deduction for him as a dependent; I'm not sure about that).

To know whether you could gain a tax benefit by giving money to the charitable trust we'd need to know more about the nature of that trust. What do you know about it? (I would be surprised to find out that donations to a trust to benefit one individual could be tax deductible, but what I know about trusts would fit in this sentence, so wait for the tax pros to chime in.)

- Megan
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