Alabama Crummey Trust Agreement for Benefit of Child with Parents as Trustors
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How to fill out Crummey Trust Agreement For Benefit Of Child With Parents As Trustors?
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FAQ
Advantages of a Crummey TrustA Crummey Trust allows you to take advantage of the gift tax exclusions and simultaneously minimize your estate taxes.You do not have to provide an opportunity for the beneficiary to withdraw the entire balance of the trust until a certain age.A Crummey trust can have multiple beneficiaries.More items...?
The trustee manages assets of Crummey trusts, and you set terms that determine when distributions should be made. A Crummey Trust is generally more flexible and advantageous than a 529 college savings account. Multiple beneficiaries can be included in the trust, including beneficiaries over 21.
However, you should be aware of some downsides to naming a beneficiary as the trustee. Making one of the beneficiaries the trustee can potentially create conflict with the other beneficiaries. The other beneficiaries may wonder why they were not selected as trustee and may resent the beneficiary who was selected.
Under the doctrine of merger, if the sole trustee and the sole beneficiary are occupied by the same person, there is no division of property interests between legal and equitable title. Therefore, this would make the trust legally invalid because the two types of title have merged.
A sole beneficiary cannot be sole trusteeAccording to state trust law requirements, if the sole beneficiary is the sole trustee, the trust is invalid. A beneficiary can be a trustee only if there are other beneficiaries and/or other trustees.
So can a trustee also be a beneficiary? The short answer is yes, but the trustee will have to be exceedingly careful to never engage in any actions that would constitute a breach of trust, including placing their personal interests above those of the other beneficiaries.
Crummey power is a technique that enables a person to receive a gift that is not eligible for a gift-tax exclusion and change it into a gift that is, in fact, eligible. Individuals often apply Crummey power to contributions in an irrevocable trust.
Key Takeaways. Crummey power allows a person to receive a gift that is not eligible for a gift-tax exclusion and then effectively transform the status of that gift into one that is eligible for a gift-tax exclusion.
Crummey Trust, Definition This type of trust is typically used by parents who want to make financial gifts to minor or adult children, though anyone can establish one on behalf of a beneficiary.
Crummey trusts are typically used by parents to provide their children with lifetime gifts while sheltering their money from gift taxes as long as the gift's value is equal to or less than the permitted annual exclusion amount.
