IRS takes a tougher position on Crummey trusts in new TAM
Article Abstract:
The 1996 Cristofani Action on Decision, Technical Advice Memorandum 9628004 and the Kohlsaat case currently before the Tax Court indicate a willingness by the IRS to attack the use of Crummey trusts. Crummey trusts are used to take advantage of the annual gift tax exclusion by providing beneficiaries with the right to withdraw from the trust. The IRS is applying substance over form arguments to such arrangements, particularly when beneficiaries possess contingent remainders, to argue that the beneficiaries are not truly expected to exercise their withdrawal powers.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1996
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Crummey powers for contingent beneficiaries OK'd
Article Abstract:
The Tax Court, in the case of Estate of Cristofani, has rejected the IRS's attempt to create more restrictive standards for utilizing Crummey withdrawal powers to obtain annual exclusions for gift taxes. The IRS has tried to eliminate these exclusions for Crummey power holders who are contingent beneficiaries. This case demonstrates the leveraged use of inter vivos gifts among family members. Tax-planning guidelines are provided.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1992
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The 'mandatory income trust': an alternative to a Crummey Trust
Article Abstract:
Mandatory income trusts can provide estate planner better tax benefits than do Crummey trusts. Mandatory income trusts can be drafted so that remainders receive minimal taxation and the principal have few restrictions when paid out. Mandatory trusts also allow greater flexibility for trusts comprised of life insurance or other nonproductive assets.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1998
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