Legal Question in Wills and Trusts in New York

Re: Crummey Trusts

You are confusing two concepts: Crummey is the case that states if the trust beneficiary is given certain current withdrawl rights (can demand the annual addition during a limited time period, after which the gift is subject to the terms of the trust), with the Christofani decision that allowed full annual exclusions for all beneficiaries (3 children and 15 granbdchildren) even if the trust would ultimately be distributed to the 3 children, if the Crummey withdrawal right was not exercised.

To my knowledge, once the Crummey withdrawl right has lapsed, and the gift become subject to the trust regime, any additional provisions (such as the non-passage of the gift to a divorced spouse) retains the eligibility for annual exclusion.

However, if the provision is to take effect during the limited period the beneficiary has the right to withdraw (if the separation or divorce occurs before the time period lapses), and the gift reverts to someone else, the annual exclusion would not apply to that gift.

In brief, if the right to withdraw is conditional, the annual exclusion should not apply to that gift. The withdrawal right must be absolute to my knowledge.

It might apply to all gifts if the same condition applied to all intended recipients, as each gift would be conditional, not absolute.

Good question. Have you done any research?