Virginia Crummey Trust Agreement for Benefit of Child with Parents as Trustors

• Category: Trusts - Bypass
• State: Multi-State
• Control #: US-0641BG
• Format: Word; Rich Text

Description

In a Crummey trust, parents place gift money into a trust and give their child (or other recipient) the right to withdraw the amount of each gift for up to 30 days after each gift is made. Since the withdrawal right begins immediately after the gift is ma A Virginia Crummy Trust Agreement for the Benefit of a Child with Parents as Trustees (also known as a Crummy trust) is a specific type of irrevocable trust established in Virginia. This trust agreement is a powerful estate planning tool that serves to transfer assets to a child while taking advantage of certain tax benefits. In a Virginia Crummy Trust Agreement, the parents act as trustees, meaning that they create the trust and contribute assets to it for the benefit of their child. The purpose of this trust is to allow the child to receive gifts or transfers of assets from the parents in a tax-efficient manner. By utilizing the Crummy power, the trust assets may qualify for the annual gift tax exclusion. The Crummy power, named after the court case that first established this technique, gives the child a limited period of time (usually 30 days) during which they can withdraw assets from the trust. This withdrawal right makes the gift a present interest rather than a future one, which allows it to be exempt from gift taxes up to a specified exclusion amount. There are different types of Virginia Crummy Trust Agreements for the Benefit of a Child with Parents as Trustees, depending on various factors that parents may consider when setting up the trust. Some key types include: 1. General Crummy Trust: This is the most common type, where parents make annual gifts to the trust that qualify for the gift tax exclusion. The child has the right to withdraw these gifts for a specific period. 2. Crummy Life Insurance Trust: In this variation, the trust is primarily funded by life insurance policies taken out on the parents. The trust beneficiaries, who are usually the children, receive the death benefit proceeds upon the parents' passing. 3. Dynasty Crummy Trust: This type extends the Crummy trust beyond one generation, allowing assets to benefit multiple generations of beneficiaries. It helps to preserve wealth and minimize estate taxes over time. 4. Crummy Charitable Trust: Here, a portion of the trust assets is designated for charitable purposes. This allows parents to fulfill philanthropic goals while taking advantage of the tax benefits associated with the Crummy power. It is important for parents to consult with a qualified estate planning attorney to understand the specific details, tax implications, and suitability of a Virginia Crummy Trust Agreement for the Benefit of a Child with Parents as Trustees for their unique circumstances. Planning ahead with such a trust can provide significant advantages in terms of asset protection, tax efficiency, and preserving family wealth.

A Virginia Crummy Trust Agreement for the Benefit of a Child with Parents as Trustees (also known as a Crummy trust) is a specific type of irrevocable trust established in Virginia. This trust agreement is a powerful estate planning tool that serves to transfer assets to a child while taking advantage of certain tax benefits. In a Virginia Crummy Trust Agreement, the parents act as trustees, meaning that they create the trust and contribute assets to it for the benefit of their child. The purpose of this trust is to allow the child to receive gifts or transfers of assets from the parents in a tax-efficient manner. By utilizing the Crummy power, the trust assets may qualify for the annual gift tax exclusion. The Crummy power, named after the court case that first established this technique, gives the child a limited period of time (usually 30 days) during which they can withdraw assets from the trust. This withdrawal right makes the gift a present interest rather than a future one, which allows it to be exempt from gift taxes up to a specified exclusion amount. There are different types of Virginia Crummy Trust Agreements for the Benefit of a Child with Parents as Trustees, depending on various factors that parents may consider when setting up the trust. Some key types include: 1. General Crummy Trust: This is the most common type, where parents make annual gifts to the trust that qualify for the gift tax exclusion. The child has the right to withdraw these gifts for a specific period. 2. Crummy Life Insurance Trust: In this variation, the trust is primarily funded by life insurance policies taken out on the parents. The trust beneficiaries, who are usually the children, receive the death benefit proceeds upon the parents' passing. 3. Dynasty Crummy Trust: This type extends the Crummy trust beyond one generation, allowing assets to benefit multiple generations of beneficiaries. It helps to preserve wealth and minimize estate taxes over time. 4. Crummy Charitable Trust: Here, a portion of the trust assets is designated for charitable purposes. This allows parents to fulfill philanthropic goals while taking advantage of the tax benefits associated with the Crummy power. It is important for parents to consult with a qualified estate planning attorney to understand the specific details, tax implications, and suitability of a Virginia Crummy Trust Agreement for the Benefit of a Child with Parents as Trustees for their unique circumstances. Planning ahead with such a trust can provide significant advantages in terms of asset protection, tax efficiency, and preserving family wealth.