Crummey Trust Agreement Template

What Is the Crummey Trust Agreement?

This trust document establishes an irrevocable trust specifically designed to accept annual gifts that qualify for the gift tax exclusion through properly structured withdrawal rights. Named after the landmark Crummey v. Commissioner case, these trusts allow you to make substantial gifts to family members while preserving your lifetime estate tax exemption. Each beneficiary receives temporary rights to withdraw their share of contributions, typically for 30 days, making the gifts present interests that qualify for the annual exclusion.

Without proper Crummey provisions, your contributions would be future interest gifts that don't qualify for annual exclusions. This means a parent with three children could only gift $18,000 total per year without filing gift tax returns and consuming their lifetime exemption. With a properly structured Crummey trust, that same parent can gift $54,000 annually with zero gift tax consequences while building wealth outside their taxable estate.

 

 

Is This Crummey Trust Agreement Right for You?

You need this agreement if you're:

• Making substantial annual gifts to children or grandchildren
• Looking to reduce your taxable estate through systematic gifting
• Wanting to preserve your lifetime estate tax exemption
• Planning to fund life insurance policies through annual contributions
• Seeking creditor protection for gifts to family members
• Building wealth for beneficiaries under professional trustee management

You definitely need this agreement if:

• Your estate will exceed the federal exemption threshold at death
• You want to gift more than $18,000 per beneficiary annually
• You're funding life insurance trusts with annual premium contributions
• You've been making gifts without proper documentation of withdrawal rights
• You need IRS-defensible proof that beneficiaries had present interest in gifts

 

Why Thousands Trust Legal GPS Templates

Save Money: Estate planning attorneys charge $3,000-6,000 to draft custom Crummey trusts with proper withdrawal provisions.

Save Time: Download immediately and complete in under two hours with clear choice options for distribution schedules.

Look Professional: Court-tested language meets IRS requirements and creates enforceable trustee obligations for professional asset management.

Keeps You Out of Court: Properly structured Crummey Withdrawal Rights provisions with automatic lapse and hanging power protections ensure your contributions qualify for annual exclusions, while comprehensive Spendthrift Protection articles shield trust assets from beneficiaries' creditors, divorcing spouses, and financial mistakes throughout their lifetimes.

 

 

 

Get Protected in 3 Simple Steps

Step 1: Secure Checkout

Complete your purchase through our encrypted payment system. You'll receive instant access to your template.

Step 2: Instant Download

Download your Crummey trust agreement immediately as a fully editable document.

Step 3: Fill In the Highlighted Fields

Open the template and customize the beneficiary information, distribution schedule, and withdrawal right provisions. Our comprehensive guide explains every complex decision point including the 5 and 5 power limitation, hanging power provisions, and HEMS distribution standards.

 

Frequently Asked Questions

Can I use this template multiple times?

Yes. Once you purchase the template, you can use it to create multiple Crummey trusts for different beneficiary groups or gifting purposes. Customize it each time for your specific family situation.

Is this contract legally binding?

Yes. This is an attorney-drafted irrevocable trust agreement that creates legally enforceable obligations. Once signed and funded, the trust cannot be revoked, and the trustee must administer it according to the terms you've specified.

What makes this different from a regular irrevocable trust?

The Crummey withdrawal rights. Without these temporary withdrawal provisions, your contributions would be future interest gifts that don't qualify for the annual gift tax exclusion. The Crummey provisions transform your gifts into present interests, allowing you to use the annual exclusion multiple times per year across multiple beneficiaries.

Do beneficiaries actually withdraw the money?

Typically no. While beneficiaries have the legal right to withdraw during the notice period, most understand that exercising withdrawal rights defeats the family's long-term estate planning goals. The withdrawal rights exist primarily to satisfy IRS requirements for the annual exclusion. However, the rights must be genuine and meaningful—you cannot prevent beneficiaries from withdrawing if they choose to do so.

What is the "5 and 5 power" and why does it matter?

When a withdrawal right lapses without being exercised, the IRS treats that lapse as a gift from the beneficiary to the other beneficiaries—but only to the extent it exceeds the greater of $5,000 or 5% of trust assets. This template includes hanging power provisions that prevent withdrawal rights from lapsing to the extent that would create unintended gift tax consequences for your beneficiaries.

Can I use this for life insurance premium funding?

Yes. Crummey trusts are commonly used to hold life insurance policies. You make annual gifts to the trust, the trustee sends Crummey notices to beneficiaries, the withdrawal rights lapse, and the trustee uses the contributed funds to pay insurance premiums. This removes the death benefit from your taxable estate while maximizing your use of annual exclusions.