My wife is a US citizen (I'm from UK) and we have UK trustee accounts for our children who have dual citizenship. I don't believe that the accounts have any restriction of the nature that "The parents are not legally permitted to use any of the funds to support the child" (IRS publication 17), rather the account publicity states "Trustees are responsible for ensuring that all transactions are for the benefit of the child" while the official Terms and Conditions do not appear to say anything in this regard, but rather that they will accept any one signature for withdrawals etc.

The income is certainly the child's for UK tax purposes (not gifted by the parents) but this is no doubt irrelevant for USA. If this is treated as my wife's income, should all or half or what proportion be declared on the 1040? At present this would not affect the non-taxable situation, but as the accounts increase in size it might well so I want to get this right from the start.