What is a Crummey power?
Crummey power is a special power regarding gifts in trust. It was named for a court case of some years ago. In order for a gift in trust to qualify for the annual gift tax exclusion, the individual recipient must have a right to withdraw the money for some certain period of time. The right to take the gift from the trust during the period of time indicated is known as the Crummey power.
A Crummey power is a provision contained in certain irrevocable trusts that permits specified trust beneficiaries to withdraw gifts you make to the trust for a limited period of time. The provision allows gifts to the trust to qualify for the federal annual gift tax exclusion. The exclusion effectively exempts annual gifts up to $11,000 per trust beneficiary from the federal gift tax. Over your lifetime, regular gifting to the trust may reduce the size of your gross estate. Without a Crummey power, all gifts you make to your irrevocable trust will be subject to gift tax. Here’s how it works. You transfer funds to an irrevocable trust containing a Crummey power. The trustee must then give adequate notice to each beneficiary stating that the funds can be withdrawn. The time frame for withdrawal should be reasonable (e.g., 30 days). Whether or not the beneficiaries exercise their right, the gift still qualifies for the annual gift tax exclusion. If the withdrawal right is not exercised, t
A Crummey power is a special power regarding gifts in trust. It was named for a court case of some years ago. In order for a gift in trust to qualify for the annual gift tax exclusion, the individual recipient must have a right to withdraw the money for some certain period of time. The right to take the gift from the trust during the period of time indicated is known as the Crummey power.
A Crummey power is a special power regarding gifts in trust. It was named for a court case some years ago. In order for a gift in trust to qualify for the annual gift tax exclusion, the individual recipient must have a right to withdraw the money for some certain period of time. The right to take the gift from the trust during the period of time indicated is known as the Crummey power.
