Tax Planning

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.

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.