Orange County California

Trust Attorneys


When a person has a large estate, they may decide to create an estate plan to minimize potential estate taxes. One way of doing so is by making annual gifts up to the annual gift tax exemption amount, which is currently $14,000 per year. These gifts can be made without incurring gift or estate taxes.

For individuals who do not want their beneficiaries to have immediate access to the gift, a Crummey trust can be used to limit the beneficiaries’ right to withdraw the gift amount while still preserving the tax benefits of making a completed gift for IRS purposes. A crucial aspect of this type of plan is for the trustee to provide beneficiaries with Crummey notices when gifts are made.

5 Requirements for Crummey Notices During Trust Administration

The following is an overview of the steps for providing Crummey notices that satisfy the requirements of the IRS:

  1. A notice must be sent by the trustee to the beneficiaries when a gift is made to the trust.
  2. The notice must state the amount of the gift.
  3. The notice must state that the beneficiaries have a right to withdraw the amount of each gift for up to 30 days after the gift is made.
  4. The right to withdraw begins immediately upon the gift being made.
  5. The notice should state that if the beneficiary does not withdraw the gift within the 30-day period, the withdrawal right lapses. The money then remains in the trust until it is distributed according to the trust terms.

Crummey notices are crucial for the administration of a trust because they are necessary to classify the gift as a “completed gift” for tax purposes. If a gift is not considered “completed,” it will not qualify for the annual gift tax exclusion. Fortunately, trustees are allowed to seek assistance when drafting Crummey notices and administering Crummey trusts. To learn more, we encourage you to contact us today at (714) 282-7488.

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