In 2026, a parent funds a Crummey trust with $57,000 ($19,000 per child) for three children. Which statement about the gift tax annual exclusion is correct?

In 2026, a parent funds a Crummey trust with $57,000 ($19,000 per child) for three children. Which statement about the gift tax annual exclusion is correct?

• A. The entire $57,000 qualifies for the annual exclusion because of the Crummey powers.
• B. None of the contribution qualifies because the trust is irrevocable.
• C. Only $19,000 qualifies because the annual exclusion applies to the trust, not the beneficiaries.
• D. $38,000 qualifies because only two beneficiaries can use Crummey powers.

Answer: (A)

Crummey powers create present interests for each beneficiary. Because the gift tax annual exclusion is applied per donee, each child can exclude up to their own limit for gifts to the trust. With three children and a per-child exclusion of $19,000, the full $57,000 can be excluded in 2026. The irrevocable nature of the trust doesn’t affect the present-interest requirement—the crucial factor is that each child has a withdrawal right. The other ideas miss that the exclusion is allocated to each beneficiary’s withdrawal rights and not limited by the trust’s existence or by only counting part of the gift.

Crummey powers create present interests for each beneficiary. Because the gift tax annual exclusion is applied per donee, each child can exclude up to their own limit for gifts to the trust. With three children and a per-child exclusion of $19,000, the full $57,000 can be excluded in 2026. The irrevocable nature of the trust doesn’t affect the present-interest requirement—the crucial factor is that each child has a withdrawal right. The other ideas miss that the exclusion is allocated to each beneficiary’s withdrawal rights and not limited by the trust’s existence or by only counting part of the gift.