Crummey Trusts and # of Annual Exclusions

Technical topics regarding tax preparation.
#1
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Taxpayer has 1 child. Taxpayer gifts 15000 to the child and $15000 to a Crummey Trust FBO of the child. How many annual exclusions is the taxpayer allowed to claim? Let's assume the taxpayer is single, no gift splitting and the Crummey provisions have been met.
 

#2
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One
 

#3
MilesR  
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Treas Reg 25.2503-2(a) specifies that when a gift is made in trust, the beneficiary of the trust is the donee. Therefore the gift to the trust is actually a gift to the child. The crummey power gives the gift the required "present interest" in order to get the annual exclusion. However, in this scenario, the parent has gifted the same donee a total of $30k. Therefore, only the first 15k is excluded and the remainder is a taxable gift.
 

#4
JAD  
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If the first gift is to the child and the 2nd to the trust, and therefore not excluded, you also have to address GST issues.
 

#5
MilesR  
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JAD wrote:If the first gift is to the child and the 2nd to the trust, and therefore not excluded, you also have to address GST issues.


Yeah, you might need to report it in sch A, part 3 on the 709 as an indirect skip that might be subject to GSTT and then allocate GSTT exemption to it in order to not mess up the inclusion ratio by inadvertently making part of the trust exempt and part of it not exempt. (Assuming there is GSTT exemption left).
 

#6
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Thank you all. The gst allocation is a good point and I will remember to attach a notice of allocation and do it in lacerte manually.
 

#7
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If you're concerned about annual exclusions, you need more sophistication in your estate tax planning. The tax is effectively voluntary via use of multiple discount structures and GRATs.
Steve
 


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