CRUMMEY TRUST
Back to GlossaryDefinition
A trust that contains Crummey powers, although otherwise it could be any type of trust
Summary
A Crummey Trust is any type of trust that includes 'Crummey powers' - special withdrawal rights that allow beneficiaries to withdraw contributions for a limited time (typically 30-60 days) after they're made. This feature transforms what would normally be a future interest gift into a present interest gift, making it eligible for the annual gift tax exclusion. Named after the landmark 1968 court case Crummey v. Commissioner, these trusts are commonly used in estate planning to maximize tax-free gifting while maintaining control over assets.
Usage Context
Essential when studying estate planning strategies, gift tax optimization, trust design, and wealth transfer techniques. Particularly important when analyzing how to maximize annual gift tax exclusions while maintaining asset protection and control.
Common Confusions
- Thinking Crummey is a specific type of trust rather than a feature that can be added to various trusts
- Confusing present interest vs. future interest gifts and their tax implications
- Believing beneficiaries must actually withdraw funds for the tax benefits to apply
- Misunderstanding the time limitations on withdrawal rights
- Assuming all trusts automatically qualify for gift tax exclusions
