Acronyms that contain the term crummey trust 

Crummey trust

In the United States a Crummey trust (named for the first person to use such a structure. see: Crummey et al. v. Commissioner of Internal Revenue, 397 F.2d 82, (9th Cir.1968) is a trust for the benefit of individuals into which gifts are made in a manner qualifying them for exclusion from the unified gift and estate tax. Crummey trust is also referred to as a Crummey provision or a Crummey power. A Crummey provision can be contained within another type of trust. Normally life insurance trusts will have a Crummey provision. Normally, gifts to minors are subject to parental / guardian control until the age of majority. In order to delay the transfer of control beyond the age of 18, the funds must be placed in trust. However, the annual gift exclusion ($15,000 per individual and $30,000 per married couple as of 2018) from the gift tax is only available for gifts of so-called present interests. Normally, a gift into a trust that comes under control of the beneficiary at a future date does not constitute a present interest. A Crummey trust achieves the desired treatment by offering the recipient a window of time (often 30 days) to take immediate control of the gift. (The control offered only applies to the current gift - by assumption, an amount no greater than the annual exclusion amount - not the entire trust.) If the recipient fails to do so during that window, the gift becomes part of the trust, and is subject to the trust's distribution conditions. However, since the recipient had the opportunity to receive the funds outside of the trust, the gift is deemed to be a present interest, subjecting it to the annual exclusion. The expectation of future annual gifts under the same mechanism (or the expectation of the withholding of such future gifts if the recipient exerts control over the gift) may motivate the recipient to relinquish control of the funds into the trust. A Crummey provision is typically a provision within another trust and ordinarily works as follows. The grantor makes a gift to an irrevocable living trust. The trust beneficiaries are notified by the trustee that they have the power for a specified time period to withdraw some or all of the gift to the trust. The simultaneous acts of the grantor transferring property to the trust and the trust beneficiaries being permitted to withdraw the gift form the trust is deemed to be the same as giving the gift to the beneficiaries outright. The gift to the trust with the Crummey provision now qualifies for the annual gift exclusion. The Crummey Trust is named after D. Clifford Crummey, who, in the 1960s, first came up with the idea. The U.S. Tax Court found this action legal in 1968, and the nickname "Crummey Power" stuck.

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