Also known as a “Crummey” trust—named after a tax court case in which the petitioner was a taxpayer named Crummey—the estate reduction trust allows a parent to transfer up to $11,000 into a trust for an underage child without having to pay any gift tax or file a gift tax return. This can be done annually, and by different individuals, such as both parents or grandparents. In this way, a significant amount of money can be built up for college or future use while a child is still young. Taxes on income earned by the trust assets will be paid out of trust earnings as long as there are no distributions to the child.

A Crummey trust is set up to give the child the minimum access to the assets required by law in order for the transfer to be considered a completed gift for estate planning purposes. Parents and grandparents may often be leery that the younger generation is not mature enough to handle the sudden wealth that a trust, or an otherwise workable estate plan, may bestow.

• Estate Administration

• Estate Reduction Trust

• Special Needs Trust