An irrevocable trust established to qualify contributions for the annual federal gift tax exclusion for gifts of a present interest. The trust is named Crummey because of a case involving a family named Crummey. The trust contains Crummey Powers, enabling a beneficiary to withdraw assets contributed to the trust for a limited period of time.
Iowa Sprinkling Trust for Children During Granter's Life, and for Surviving Spouse and Children after Granter's Death Crummyey Trust Agreement is a legal arrangement that allows the granter to provide financial support to their children during their lifetime and ensures their surviving spouse and children are taken care of after the granter's demise. This type of trust is named after Clifford Crummy, the taxpayer involved in the famous court case that established these trusts as valid estate planning tools. The Iowa Sprinkling Trust for Children During Granter's Life refers to a trust established by the granter during their lifetime to distribute assets to their children. The granter has the discretion to "sprinkle" or allocate funds among their children based on their needs, financial situations, or other criteria outlined in the trust agreement. This allows the granter to provide ongoing financial support without limitations while maintaining control over the distribution of assets. On the other hand, the Iowa Sprinkling Trust for the Surviving Spouse and Children after the Granter's Death involves the continuation of the trust arrangement upon the granter's passing. In this case, the trust becomes irrevocable, and its provisions come into effect. The surviving spouse and children become the beneficiaries of the trust, receiving financial benefits according to the predetermined terms, which might include regular distributions, lump-sum payments, or other specified intervals. The Crummy Trust Agreement takes its name from the landmark case involving the IRS challenging the validity of certain provisions in these types of trusts. In the case, the court upheld the granter's right to make annual exclusion gifts to the trust for their children, thus establishing the legal precedent for implementing such trusts effectively. The Crummy Trust Agreement typically includes "Crummy powers" or withdrawal rights offered to beneficiaries, allowing them to withdraw funds within a limited time frame each year. By providing this withdrawal option, the contributions made by the granter qualify for the annual gift tax exclusion. Overall, the Iowa Sprinkling Trust for Children During Granter's Life, and for Surviving Spouse and Children after Granter's Death Crummyey Trust Agreement offers a flexible estate planning solution for individuals looking to provide ongoing financial support for their children and secure the future well-being of their surviving spouse and children. It allows the granter to maintain control over asset distributions during their lifetime and offers tax advantages through the Crummy powers' strategy.
