What is a Crummey power?

• A. A discretionary power without withdrawal rights
• B. A general power of appointment to withdraw money from a trust, but requires written notice to beneficiaries to withdraw
• C. A limited power to withdraw from trust assets
• D. A private power to withdraw assets only with a court order

Answer: (B)

Crummey power is a beneficiary’s present right to withdraw a limited amount from a trust for a short period after each contribution, which makes the contribution a present-interest gift for gift tax purposes. The crucial feature is that the beneficiary must be given written notice of this withdrawal right and the window during which they can exercise it. This notice and the finite window convert what would otherwise be a future interest into a present one, allowing the gift to qualify for the annual gift tax exclusion. The idea is not a broad general power of appointment, nor a requirement for a court order; it’s a restricted withdrawal right that must be clearly communicated to beneficiaries to be effective. The option describing a withdrawal right that requires written notice captures this essential element.