Glossary

Crummey letter

A written notice telling a trust beneficiary of a temporary right to withdraw a new contribution, so the gift qualifies for the annual gift tax exclusion.

Also called: Crummey notice, Crummey power, Crummey withdrawal right

A Crummey letter is a notice a trustee sends to the beneficiaries of an irrevocable trust, most often an irrevocable life insurance trust, after the grantor makes a contribution. It tells each beneficiary that they have a limited window, commonly 30 days, to withdraw their share of the new money. The name comes from Crummey v. Commissioner, a 1968 federal appeals court decision that upheld the technique.

The point is tax treatment. A gift to a trust is normally a gift of a "future interest," which does not qualify for the annual gift tax exclusion. A temporary withdrawal right turns it into a "present interest" that does. Hypothetical example: a grantor gives an ILIT $57,000 to pay the year's premium on a policy benefiting three children. Each child receives a Crummey letter describing a $19,000 withdrawal right, matching the 2026 annual exclusion of $19,000 per recipient published by the IRS. The children let the right lapse, and the trustee pays the premium.

Trouble starts when letters are not sent, are sent late or are not documented, which can lead the IRS to treat the gifts as taxable and use up lifetime exemption. Beneficiaries are expected not to withdraw, but the right must be real. Work with an estate attorney; see irrevocable life insurance trusts and gift tax and life insurance premiums.

Last reviewed October 4, 2026

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Related terms

Irrevocable life insurance trust (ILIT) A trust that owns life insurance and can't be changed or revoked by its creator, keeping the death benefit out of the insured's taxable estate. Gift tax annual exclusion The amount you can give any one person each year without filing a gift tax return or using lifetime exemption: $19,000 per recipient in 2026, per the IRS. Trustee The person or institution that holds legal title to trust assets and manages them for the beneficiaries under the trust's terms and fiduciary duties. Estate tax A federal tax on the transfer of a deceased person's assets above an exemption amount, with a top rate of 40%; some states levy their own. Beneficiary The person, trust, charity or estate named to receive a life insurance death benefit or an annuity's remaining value when the insured or owner dies.

Related guides

Gift tax and life insurance premiums When paying premiums or transferring a policy is a gift, how the 2026 $19,000 annual exclusion and $15 million exemption apply, and when to file Form 709. Irrevocable life insurance trusts (ILITs) An ILIT owns your policy so the death benefit stays out of your taxable estate. How it works, Crummey gifts, the three-year rule, costs and who needs one. Life insurance for high-net-worth families Where life insurance still fits for wealthy families: estate liquidity, ILITs, survivorship policies, business succession, with 2026 estate tax figures.