What Is a Crummey Notice, and Why Did You Receive One?
If you’re the beneficiary of a trust, you may receive a Crummey Notice when someone makes a contribution to the trust. Many people are unsure what this notice means, why they received it, or whether they need to take action. Let’s break it down so you can make an informed decision.
What Is a Crummey Notice?
A Crummey Notice is a formal notification sent to trust beneficiaries when money or assets are added to an irrevocable trust. This notice gives the beneficiary a temporary right to withdraw the contributed amount—usually for 30 to 60 days. If the beneficiary does nothing, the withdrawal right expires, and the funds stay in the trust under its terms.
This process comes from the 1968 case Crummey v. Commissioner, which set the legal framework for these notices. The ruling allows trust contributions to qualify for the federal gift tax annual exclusion by giving beneficiaries short-term access to the funds.
Why Does This Matter for Taxes?
In 2025, individuals can gift up to $19,000 per recipient without triggering gift taxes or reducing their lifetime exemption. But to qualify, the gift must be a “present interest”, meaning the recipient has immediate access to the funds. The Crummey Notice provides that access—whether or not the beneficiary actually withdraws the money.
If the notice isn’t sent, the IRS may disqualify the contribution from the gift tax exclusion, creating potential tax consequences for the trustor (the person who created the trust).
Why Did You Receive a Crummey Notice?
If the trust includes Crummey powers, you’ll receive a notice whenever someone contributes to it. The trustee (the person managing the trust) is responsible for sending these notices and documenting them for IRS compliance.
A Crummey Notice typically includes:
- The amount contributed to the trust
- The deadline for withdrawing the funds
- Instructions on how to notify the trustee if you choose to withdraw
What Are Your Options?
When you receive a Crummey Notice, you have two choices:
- Withdraw the funds – You can take the contribution out of the trust within the withdrawal period.
- Do nothing – If you take no action, the withdrawal right expires, and the funds stay in the trust.
Before making a decision, consider the following:
- Trust Purpose: Many irrevocable trusts are designed to preserve family wealth, reduce taxes, or provide long-term financial security. Withdrawing funds may undermine these goals.
- Trustee Guidance: If you’re unsure about the notice, ask the trustee. They can explain how the trust works and the impact of withdrawing funds.
- Financial & Tax Considerations: While Crummey Notices serve a tax purpose, exercising your right to withdraw funds could reduce the trust’s future benefits. If there are multiple beneficiaries, it may also create tension if others leave their funds in the trust.
What Happens If You Ignore the Notice?
Most beneficiaries choose not to withdraw funds. If you do nothing, the trustee continues managing the assets according to the trust’s terms. The trust will grow and provide benefits as originally intended.
Ignoring a Crummey Notice doesn’t mean you lose your rights as a beneficiary. It simply ensures the trust remains financially stable and continues working as planned.
Why Are Crummey Notices Important?
For trustors and trustees, issuing Crummey Notices is critical for tax benefits. Without them, the IRS could disqualify the gift tax exclusion, leading to unexpected tax liabilities.
For beneficiaries, Crummey Notices serve as a reminder that funds are being added for your future benefit. Even if no action is needed, staying informed about the trust’s growth is important.
Need Help Understanding Your Crummey Notice?
If you have questions about a Crummey Notice or your role as a trust beneficiary, we’re here to help. Contact the estate planning attorneys at Clarity Legal Group at 919-484-0012 or reach out to us online.
