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By: Scott Grossman on August 27th, 2016

Why You Should Consider An Attorney For Help With Crummey Trusts

 

Serving as the trustee comes with many duties and responsibilities. In some cases, these responsibilities must be carefully fulfilled in order to ensure that there are no negative tax consequences. Some trustees may find themselves in charge of administering irrevocable trusts that provide beneficiaries with a right to withdraw trust property based on annual contributions that are made to the trust. This is typically done in order to qualify the contribution for the annual gift tax exclusion. Part of this process requires the trustee to send out a notice of the withdrawal right to the beneficiary, also known as a Crummey notice.

7 Reasons to Hire a Lawyer to Help With Crummey Notices

Trustees should consider hiring an attorney to help with the administration of an irrevocable trust and the mailing of Crummey notices for the following reasons:

  1. Notice must be given each time a contribution is made to the trust. Failing to do so could result in the IRS treating the contribution as a gift of a future interest rather than a present interest. As a result, the gift will not be eligible for the annual gift tax exclusion.
  2. There are certain requirements that must be met in order for notice to be deemed effectively given. Failing to satisfy these requirements could give the IRS grounds to challenge whether the annual gift tax exclusion amount is available for the contribution. Most trustees, however, are not familiar with the rules relating to Crummey notices.
  3. Trustees must follow up on the notice mailings and acknowledgements, if requested from the beneficiaries. This can be a significant responsibility that many trustees are not well equipped to handle.
  4. The attorney can provide the trustee with a thorough review of proper notice procedure.
  5. The attorney can also provide the trustee with an initial package of forms relating to Crummey notices. In some cases, the trustee may be able to handle the notices going forward after the initial notices are sent out.
  6. The attorney can help the trustee to fully understand his or her responsibilities with regard to Crummey notices.
  7. If the trustee wants, and if permissible under the terms of the trust, the trustee can hire the attorney to handle all of the administrative burden associated with the Crummey notices so that the trustee does not have to worry each time a contribution to the trust is made.

Fulfilling your duties as a trustee is no easy task. Fortunately, we are here to help. We encourage you to check out our many client testimonials today.

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The Grossman Law Firm, APC · · (951) 523-8307