Are Crummey Trusts Still a Good Idea?

Crummey trusts are typically used to protect life insurance from federal estate taxes.  The trustee must send out "Crummey letters" each year, informing beneficiaries that they can withdraw the gifted amount during a certain period of time.  Financial and estate planners advise that the recent case of Estate of Turner v. Commissioner, where the Court ruled in favor of the estate where the person who died neglected to send notices to beneficiaries of their rights to withdraw his lifetime gifts to an insurance trust, shouldn't be taken as license not to send Crummey notices.  The IRS is still investigating trusts where no notice is given.

See Arden Dale, "Crummey Trusts Still Smart, Say Advisers," The Wall Street Journal, Sept. 24, 2011.

Posted by William Alan Nelson II, Associate Editor, Wealth Strategies Journal