1st Sep 2010
The Crummey Notice takes its name from the 1968 decision in Crummey v. Commissioner, 397 F.2d 82, 88 (9th Cir. 1968) in which it was established that a gift in trust qualifies for the annual Gift Tax exclusion as long as the trust’s beneficiaries have the power to withdraw the gifted assets. The beneficiaries must have actual notice of such power, but not necessarily written notice unless required by the trust document. Crummey Notices come into play with irrevocable trusts, such as ILITs and Gift Trusts, where the Grantor intends to make a present gift. Generally, it is recommended that the beneficiary be given a window of at least 30 days to withdraw the assets prior to the trust investing them elsewhere.