Is this something I must involve a lawyer in? Or can I simply set up a trust through Vanguard and contribute money to it and leave it at that? I would probably have the entire amount transferred at 25 yo or split it between 25 yo and 35 yo. How have others set up their trusts?
You have several options.
You can set up a trust that transfers the amounts at the ages you specify. If you do this, you should use a lawyer. If you do this, Vanguard can handle a trust account (i.e., you can open the trust account with Vanguard and invest inside the trust account as you wish). Do note that trust accounts require their own federal and state income tax returns if the income from the trust is above a very minor level ($100 or $600, I'd have to go look). Also, trust tax returns are different from normal tax returns. Also, trust income tax rates and brackets are very aggressive, so you'd pay more in taxes.
You can open UTMA accounts. These are essentially boilerplate trusts to help people who don't want to pay a lawyer and have complicated trust tax returns to prepare. Any money contributed becomes the kids' money, any income is reported on the kids' tax return, and the kid gets control of the money at the age of majority in your state (which is usually 18 or 21).
You can just open a separate taxable account in your name at Vanguard that you earmark as for your kids. This will cause the income to be taxed at your rate, but it's easy to do and you have complete control over when you want to distribute the money. If you already have a taxable account for yourself at Vanguard, that's OK; you can have more than one.
Finally, you could reconsider 529s. I understand your point about flexibility, but I think 529s can be considered semi-flexible. They can be transferred tax free to pretty much any family member, including any potential younger siblings or cousins or nieces/nephews or even yourself. You can withdraw tax free for tuition, fees, and internet/computer stuff at any college, as well as high school tuition up to $10K per year, and $10K per person student loans. If they get scholarships, money can be withdrawn penalty-free (but not tax-free). Any taxes and penalties are only on the portion of the withdrawal due to earnings, not the entire amount.
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Regarding your last question:
I have a testamentary trust currently in my will (it gets created and funded when I die), and I forget exactly how I set it up but it has distributions of 1/3 at age 25/30/35 I think. My kids are 25/21/19, and I think that when I next revise my will I'm going to remove that distribution schedule and the trust and just let them have the money immediately. They're all mature enough now to realize they have one shot at it, and I don't want to burden my sister (my executrix) with the hassle of managing the trust account for another decade after I die if I should happen to die soon enough to where the distribution schedule comes into play.
My Dad and Mom had a marital bypass trust which they set up in an effort to avoid estate taxes, which it would have had the tax laws remained the same as they were in 1999. The lawyer bills to write up the trust documents were probably in the high hundreds low thousands. The lawyer bills to help with the trust establishment when my Mom died, and then to change the trust after the fact, and then the CPA's bill for the first year's trust tax returns totaled in the low five digits. Now I do the trust tax returns each year, which takes a day or two total. Last year I collected 26 different documents, files, and spreadsheets for the trust tax returns, and that's for a very basic trust account.
