Estate Planning Red Flag – Crummey powers provide for withdrawal of a specific dollar amount

Description

Abstract: A lifetime gifting plan that takes advantage of the $13,000 per recipient annual gift tax exclusion can be a powerful strategy for transferring wealth tax free. But the exclusion is available only for gifts of present interests. This can be a problem for contributions to trusts, which are generally considered gifts of future interests. This article discusses Crummey powers, which give trust beneficiaries the right to withdraw contributions for a specified period after they’re made, and which convert a future interest into a present interest that qualifies for the annual exclusion.