Beneficiary has the right to withdraw (Crummey power) any contributions made to the trust within a specified period of time – usually 30 days

Contributions can be made periodically

Beneficiary must be given a notice of his or her withdrawal right after each contribution is made – prudent to notify in writing

The trust document can limit the amount of money the beneficiary can withdraw to the annual gift tax exclusion or the fair market value of the property contributed to the trust, whichever is less

Trust is irrevocable and must file its own 1041

Trust document can limit the use of assets to certain types of expenses

The expectation is that the beneficiary will not exercise the Crummey power

There can be no prearranged understanding that the beneficiary will not withdraw the contributions

Cannot have a ‘naked’ Crummey power – typically when the beneficiary has no economic interest in trust property