Crummey Trust
A type of irrevocable trust that allows gifts to qualify for the annual gift tax exclusion by giving beneficiaries a temporary right to withdraw the gifted amount. Named after the Crummey v. Commissioner court case.
Legal Definition
An irrevocable trust that includes Crummey withdrawal powers — the right of beneficiaries to withdraw trust contributions for a limited period (typically 30-60 days) — to qualify the contributions as present interests eligible for the annual gift tax exclusion under IRC §2503(b).
Practical Example
Parents contribute $18,000 to a Crummey trust for their child. The child receives a letter stating they have 30 days to withdraw the money. The child does not withdraw it (as expected), and the gift qualifies for the annual exclusion, avoiding gift tax.