Families with financial means need effective ways to pass wealth to future generations, take advantage of the annual gift tax exclusion, and minimize estate taxes while preventing loved ones from squandering their money. A Crummey trust is designed to accomplish all these goals.
If you are ready to start transferring your wealth to future generations, speak with a lawyer experienced in creating Crummey Trusts in Reno. A capable trusts attorney can explain how it works and help you determine whether it is the right financial vehicle for you and your family.
As of 2026, estates valued over $15 million (or $30 million for married couples) are subject to federal estate taxes. People whose estates approach or exceed that threshold typically strive to reduce the value of their taxable estate so that a larger percentage of their wealth goes to the people and institutions of their choice, instead of the government.
One common technique is to designate assets to future generations. These gifts help the loved ones get established or maintain a lifestyle while reducing the value of the donor’s taxable estate. IRS rules allow a donor to gift a certain amount per person every year without incurring gift taxes or using the donor’s lifetime exemption.
A Crummey Trust allows a donor to deposit an amount up to the annual limit (in 2026, that limit is $19,000) into the trust for the benefit of a beneficiary. Deposits to the trust do not count toward the lifetime gift exemption. A Reno attorney could discuss the current exemptions and design a Crummey trust to take maximum advantage of them.
A Crummey Trust is an irrevocable trust. The donor or grantor who funds the trust must appoint a trustee to manage the property it contains.
One of the distinguishing features of a Crummey Trust is that beneficiaries over age 18 have an immediate but time-limited opportunity to withdraw funds and use it however they like. When the grantor makes a deposit, the trustee must send the beneficiary a letter informing the beneficiary and reminding them of their right to make a withdrawal; but they can only withdraw the most recent deposit.
It is usually a grantor’s intention that the beneficiary not withdraw the money so that the funds in the trust have the opportunity to grow. However, a beneficiary’s request to withdraw must be honored. A Reno attorney can explain how the right to withdraw is critical to the tax advantages a Crummey Trust provides.
Numerous forms of trust exist and each has advantages and disadvantages. One disadvantage of a Crummey Trust is that the cost of establishing and administering the trust may be higher than for some other forms.
The terms of the trust must be drafted carefully to preserve its tax advantages and the beneficiary must have immediate access to each deposit for a specified period. If the trustee fails to notify a beneficiary of the deposit, the IRS could disallow the gift tax exemption on the deposit.
Despite the complexity of administration, a Crummey Trust is a useful tool for many families in Reno, and an attorney can explain whether it is a cost-efficient option for you.
When you are concerned about transferring wealth to coming generations while taking full advantage of the gift tax exemption, a Crummey Trust may be a solution worth considering. Speak with an estate planning attorney at Cross Law Group about establishing a Crummey trust in Reno.
