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Question
We have an Irrevocable Family Trust for the benefit of my wife and my issues. My wife and son are Trustees. Each year we make a distribution of the earnings of the Trust to my grandchildren- so that there are no taxes due from the Trust(the recipients have tax consequences, of course) I recently heard some discussions about a Crummy Trust. Please explain to me the differences (if any) between these two types of Trusts. What are the benefits and/or negatives of each, etc. Thank you for your help.
A Crummy trust provision allows the beneficiaries to request a distribution of a specified amount from the trust each year. It is used to preserve the ability of the trust to shelter assets from the estate tax. The Crummy trust provisions are used to improve the tax aspects of irrevocable trusts, and are not a stand-alone trust.
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Answers by Expert:
Stephen C. Gruber
Expertise
I have been practicing law for 18 years and I specialize in estate planning. I am certified as a specialist in estate planning, trust and probate law by the State Bar of California Board of Legal Specialization. Please limit questions to estate planning subjects, such as trusts, wills, probate, trust administration, and powers of attorney. I am licensed to practice law only in California, and can answer questions only about California law.
Experience
I have been practicing law since 1982 and most of the estate plans that I prepare involve living trusts, wills, and powers of attorney. I am also a probate attorney in the San Francisco Bay Area.
I received a bachelor's degree from Stanford University and a law degree from Willamette University in Salem, Oregon. I am certified as a specialist in estate planning, trust and probate law by the State Bar of California Board of Legal Specialization.{My website at www.ca-trusts.com has additional information about trusts, wills, and probate for California residents. Since I am a California attorney, I can answer only questions relating to California law. {Law{Estate & Probate{
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