Families using irrevocable trusts must send Crummey notices by December to avoid taxable gifts and protect lifetime exemptions.
A one-page Crummey letter sent annually allows donors to convert irrevocable trust contributions into present-interest gifts, qualifying for the $19,000 annual gift-tax exclusion. Without it, contributions risk being treated as taxable gifts by the IRS.
For a trust with four beneficiaries, this mechanism enables a single donor to shift $76,000 yearly without reducing the $15,000,000 lifetime estate exemption. The IRS requires strict adherence to deadlines, rejecting late or backdated notices permanently.
The letter grants beneficiaries a temporary withdrawal window, typically 30 days, transforming future-interest gifts into eligible exclusions. Missing the December deadline forfeits the exclusion for that year.