The Crummey Trust (Involving Multiple Beneficiaries)
Crummey Recap
The purpose of the Crummey trust is to enable people to gift into a trust and receive the annual gift tax exclusion, while still enabling the gifts to be held in trust for the beneficiary rather than being given to them outright. The trust accomplishes this by giving the recipient a certain amount of time (at least 30 days) to take immediate control of the gift; if the recipient chooses to let this time period lapse, the gift remains in the trust. Because the recipient had the chance to take control of the gift, the gift qualifies as a present interest, and can therefore qualify as part (or all) of the donor’s annual gift tax exclusion amount. When the trust has only one beneficiary, this becomes a great way to gift into a trust without having to pay the gift tax or using up any of your $5 million lifetime exemption amount. However, if the trust has more than one beneficiary, the issue becomes more complicated.