Crummey Trust And Crummey Withdrawal Power

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Crummey Trusts with Crummey withdrawal rights are a popular tool often implemented at the end of a calendar year to enable parents, grandparents, aunts and uncles, and other donors to take advantage of present interest annual exclusion gifts each year.
Let's say you want to help your grandchild and, at the same time, remove assets from your estate so they won't be subject to the 40% estate tax when you die. But you don't feel comfortable just writing a check for $15,000 to your grandchild - they might spend it improperly.
You would prefer to have that $15,000, and other subsequent gifts, put in a trust for them. But putting a gift in a trust for someone to receive later is a gift of a future interest, which does not qualify for the present interest annual exclusion.
However, you can set up a "Crummey Trust," put the gift in the trust, and allow the trust beneficiary to have a Crummey withdrawal power - a right to withdraw or take the gift for a limited time (perhaps 30 days). This Crummey withdrawal power is what allows the gift to be classified as a gift of a present interest, qualifying for the present interest annual exclusion. If the beneficiary does not exercise their withdrawal right, then the funds stay in the trust subject to the terms of the trust instrument.
Beneficiaries, quite frankly, rarely exercise their Crummey withdrawal rights because, if they do, they are unlikely to ever see another gift from that donor or relative.
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Paul Rabalais
Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: [phone]

[@emrod38]

currently studying for my CFP. thanks for the clear explanation!

[@winkerlinker7]

Some how you managed to sum up estate taxes, and gift taxes in a nutshell and articulated it better then any of my textbooks, thank you! Now i have a complete understanding of Crummy Trust.

[@americasestateplanninglawy1946]

Glad to hear I played a small contribution BC! 😎

[@roniisablake]

The first time one of my client's told me he needed to contribute to his son's crummey trust, I thought, "Boy, this man doesn't like that his son has a trust." 😮 Later I learned that it was the proper name.

[@marksmith7608]

Excellent, and hilarious to think about grandpa telling his 19-year-old to think twice about exercising his Crummy. Great explanation, thank you.

[@MissGnarlyCarly]

I am taking the CFP exam tomorrow and your videos have been so helpful with the estate planning concepts! Thanks for posting!

[@CharlesAPetitjean]

How’d ya do! I’m taking mine March 11, and estate is certainly a weak point of mine (like most of us)..

[@MissGnarlyCarly]

@@CharlesAPetitjean Well, it ended up taking two tries but I passed in November! You got this!!!

[@emmieashwell990]

@@MissGnarlyCarly Hi! I am taking the course work from the CFP education requirement right now. I saw your comments... may I ask what you did different during the second go where you passed? I am feeling very nervous about the exam and am not done with the course work yet it feels very overwheloming, any tips?

[@mxchael_ad]

This is an incredible explanation. Thank you so much.

[@leeconrad0101]

Thank you so much for your video. I am a personal finance student and your video really helped me to understand this concept. Thank you.

[@americasestateplanninglawy1946]

Super. Keep learning 👍

[@kyle4548]

Loved this video, although I had already understood the concepts prior I think the way you explained it makes it easier to articulate it to others.

[@USLad2008]

Excellent explanation

[@tuyetvuong4892]

If I give my grandkid 15000 /year for 10 years. Does she have to pay tax for 150000?

[@mrcmdjd57]

Excellent explanation!

[@LoveInHighPlacesMinistry]

So does this mean if they do not exercise the right to use crummy withdrawal power after 30 days the money is still included in the annual gift exemption instead of the deffered estate exemption?

[@RadhikaMeera]

Currently studying for CFP and great explanation. Would be better if you could give a small illustration. that sticks in the cleint's viewes' mind so much quicker. Terms like 'present interest ' could be confusing. please could you make another corollary video to this on "hanging' Crummey powers. perhaps with a simple illutration. Thank you

[@elizabethfreeman801]

How are capital gains and income from the trust taxed?

[@sred5856]

Nice video. In 2503 or Crummey Trust, can the Grantor and Trustee be the same person?

[@dalton7442]

Could you explain the hanging power?

[@dylanw890]

I liked this video but I would have preferred you to have stated the authority backing up alot of the points you mentioned during this video. If there is a more technical video, please let me know. (I am pursuing an M.S. in Taxation)

[@SusieAspen]

If grandchild is in different state than grandparent, would you file the Crummey Trust in the county where the child lives or at the Recorder's office where the grandparent lives? Do all trusts need to be filed at the Recorder's office?

[@tomjones2056]

What kind of language should be included in the trust to indicate this provision?

[@MrPennstate2014]

When a beneficiary receives notice of his or her right to withdraw funds from a Crummey trust, does that create constructive receipt and therefore a taxable event?

[@mrlozano]

You mentioned the grandpa telling his granddaughter that if she does use her crummy withdrawal capacity, that he likely would stop gifting the trust next year and so on and so on. But what if you have a scenario where the beneficiary only takes a partial amount from the gift, and not all of it (or let's say they take all of the gift one year) what's to stop grandpa from gifting the trust the following year, and the granddaughter deciding that she's going to let the gift remain untouched for that year? Is that also unheard of? Suppose the granddaughter wants to use the gift every other year? Say the granddaughter wants to skim a little off the top each year to put into gold and silver investments? So that when she inherets the trust fund down the road, what ever purchasing power was lost as a result of the dollar being worth less 20 years from now, she's been able to recoup that purchasing power bcus the prices of precious metals have gone up. Hell, for all we know, the investment she made in gold for 20 years (having had the privilege to use some of her yearly gift) might yield her more purchasing power than what ever paper money value she inhereted! Is this a safe way to protect some of your trust funds wealth from confiscation thru monetary inflation which inevitably leads to price inflation?

[@cheryldodd-marko9787]

🕊🇺🇲💕

[@douglaswileyofficialdougth2390]

The Center for Special needs Trust Administration in Clearwater FL is Crummy . I'm Homeless with $228k in this Trust .?????????

[@kibaik2280]

Painful explanation with nothing about taxes on the trust. Ugh!