Abe and Jan are well to do and are concerned that the estate tax exemption of $1

Question

Abe and Jan are well to do and are concerned that the estate tax exemption of $10,500,000 (combined) will not be sufficient to avoid estate taxes. The have 3 married children and 7 grandchildren. They would like to give about $300,000 per year to their children and grandchildren, but do not want to pay any gift tax or reduce their lifetime gift and estate tax deduction. They also do not want the young children to be in control of the money. They have heard about the Crummey powers and ask you if that would be the solution to their situation. Research the Crummey rules and recommend to Abe and Jan what to do. Cite your sources.

Explanation / Answer

Crummy power enables a person to receive a gift that is not eligible for a gift tax exclusiin and change it to one that is eligible

But the withdrawal rights with the benefeciaries are for limitrd time periid, one it gets lapsed it will become eligible for gift tax, so late contribution in the trust must be avoided.

So they can use the crummy power but need to make sure about the timelines of benifits and plan their deposits and withdrawals from trust.

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