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Rogelio Gonzalez, CRPC®, CSRIC™
Financial Advisor, Prudential Advisors
Pacific Northwest Financial Group
7525 SE 24th Street, Suite 110
Mercer Island, WA 98040
Phone: 360-919-4271
March/April 2025
Protect Assets and Help Minimize Estate Tax
A Crummey Trust is known for leveraging the annual gift tax exclusion to minimize gift tax on assets passing to children, particularly minors and other loved ones in the future. The exclusion lets you give a certain amount to any number of people outright or in a trust gift-tax-free each year.
Creating and Funding a Crummey Trust
People commonly fund Crummey trusts with life insurance. You can purchase a new policy or use an existing one. The goal is to prevent the insurance proceeds from being included in your taxable estate and have benefits managed to avoid misuse by beneficiaries or being subject to their creditors. Crummey trusts are irrevocable.What makes a Crummy trust different from other trusts is that you designate a set period during which your beneficiaries can withdraw assets. For example, choose a withdrawal period within 30 days after you create and fund the trust. New withdrawal notices must be sent whenever assets are added to the trust.
More Uses
Any financial gifts you designate to make will be distributed to each beneficiary according to your terms and timeline. You might, for example, specify terms that the trust assets be used to pay for your child's college. Another idea is to direct that the assets be distributed when the child accomplishes a goal, such as completing college, or for a specific purpose, such as buying a house or starting a business.A Crummey trust is complex. To accomplish gift-tax and protection goals, you need the guidance of your trusted legal and financial professionals.
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Securities and investment advisory services offered through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.
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