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.
Puerto Rico Sprinkling Trust for Children During Granter's Life, and for Surviving Spouse and Children after Granter's Death Crummyey Trust Agreement In Puerto Rico, a Sprinkling Trust for Children During Granter's Life, and for Surviving Spouse and Children after Granter's Death, commonly known as a Crummy Trust Agreement, is a legal tool that enables the granter to designate specific assets for the benefit of their children during their lifetime and provide for their surviving spouse and children after their passing. This type of trust allows for flexibility and control over the distribution of assets, minimizing potential tax liabilities, and protecting the financial well-being of the beneficiaries. The Crummy Trust Agreement derives its name from the landmark case of Crummy v. Commissioner (1968) which established the use of withdrawal rights by beneficiaries to qualify gifts to a trust for the annual gift tax exclusion. The trust is typically irrevocable, meaning that once assets are placed into the trust, the granter relinquishes ownership and control over them. During the Granter's Life: 1. Sprinkling Trust — This type of trust allows the granter to distribute funds or assets to their children unevenly, based on their specific needs and circumstances. It can be particularly useful when the granter wants to provide for various aspects of their children's lives, such as education, healthcare, or starting a business, ensuring proportional support tailored to individual needs. After Granter's Death: 1. Surviving Spouse and Children Trust — This trust ensures that the surviving spouse and children of the granter are adequately provided for after their passing. The trust assets can be distributed to support their financial needs, education expenses, healthcare costs, or other specified purposes, depending on the terms outlined in the trust agreement. The Crummy Trust Agreement incorporates a mechanism called "Crummy powers," allowing the beneficiaries to withdraw a specific amount of assets contributed to the trust for a limited period, usually 30 days, after the contribution. This withdrawal right converts the gift into a present interest, qualifying it for the annual gift tax exclusion. If the beneficiaries don't exercise the withdrawal right within the specified timeframe, the assets remain in the trust and are subject to its terms and distribution provisions. The Crummy Trust Agreement can be a valuable estate planning tool for individuals in Puerto Rico seeking to establish a comprehensive and flexible plan for the financial well-being of their children during their lifetime and ensuring the continued support of their surviving spouse and children after the granter's passing. It is important to consult with a qualified attorney specializing in trust and estate planning to understand the legal requirements, tax implications, and best practices associated with this trust structure.
