Learn how trusts utilizing the Crummey technique allow taxpayers to maintain control over their gifts to beneficiaries.
Internal Revenue Code § 2503(b) affords taxpayers an incremental method to reduce their gross estate for federal estate tax purposes by making annual exclusion gifts. A special problem develops when a taxpayer wishes to make annual exclusion gifts in trust. The rules require that, to qualify for an annual exclusion gift, the gift must be of a “present interest.” Structurally, a gift in trust is a gift of a “future interest” that would not otherwise qualify for the annual exclusion from federal gift tax. Without something more, taxpayers would be unable to make gifts in trust for their beneficiaries without triggering a gift tax or a reduction in their lifetime unified tax exemption. This white paper reviews how the decision in the Crummey case upheld a planning technique that allows taxpayers to make gifts into trust that qualify as a “present interest” and thus are entitled to the annual exclusion.
Phelps Dunbar LLP
- Partner with Phelps Dunbar LLP
- Represents individuals and business entities in the areas of business transactions and operations, partnership and corporate taxation, real and personal property transactions, trusts and estates (including sophisticated estate) planning, charitable organizations (formation and operations), employee stock ownership plans and other qualified retirement plans, captive insurance, international transactions and taxation, tax controversies with the IRS, and elder law
- Clients include a regional engineering firm, national advertising agency, regional construction firm, regional stone and interior design firm, and numerous family-owned businesses operating locally, regionally, and internationally
- Frequent speaker and has several publications
- Member of numerous professional and civic organizations
- Achieved the highest rating with Martindale-Hubbell Law Directory
- The Best Lawyers in America© (Woodward/White, Inc.), Business Organizations (including LLCs and Partnerships) in Mobile, 2019; Tax Law in Mobile, 2018-2019; Trusts and Estates in Mobile, 2018-2019
- LL.M. degree, New York University School of Law; J.D. degree, University of Montana School of Law; M.A. and B.A. degrees, University of Montana
- Can be contacted at 251-441-8206 or [email protected]
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