A Crummey letter entails a letter which is normally sent to the beneficiaries of an irrevocable trust to communicate to them about a gift which has been made to the trust and the fact that they have right to withdraw the assets.
Importance of the Crummey Letter
The Crummey letter is of great importance in the administration of the trust as it specifies the gift as a completed gift for tax reasons. Indeed, if the gift is not classified as completed, then it cannot be approved for yearly gift tax exclusion.
Writer of the Crummey Letter
The Crummey letter is mainly written by the trustee of the trust every year. In the letter, the beneficiaries are informed that they can withdraw the amount gifted to them during a specified period of time (normally referred to as withdrawal window and lasts a period of 30 days)
How Is Crummey Letter Sent?
The Crummey letter can be sent via email. When emailed, it is important that the recipient acknowledges receipt of the Crummey letter once it is received in email. In addition, the letter can also be mailed through the mail service as a registered mail.
Here is a sample of Crummey beneficiary letter. If you are looking for a Crummey letter template, feel free to use this on. You can fill on your personal details as well as the details of the trust.
Crummey Letter Sample
Date
17th September 2020
Beneficiaries Name and Addresses
James Morison
154, My Road, Kingston,
New York 12457.
Re: Rights of Withdrawal
Dear Beneficiaries:
On June 15 2020, as Grantor, transferred to me, as Trustee of the Brian Watts Irrevocable Trust u/a dated 15th March 2020.
In accordance to certain provisions of the trust agreement, you have rights of withdrawal as beneficiaries:
- Every time a contribution is made to the trust, every member of the group comprising of the then living children of Brian Watts and any living children of a deceased child has a 30 day right to withdraw an amount equal to the amount of the contribution shared by the number of persons then holding withdrawal rights.
- The30-day withdrawal right commences upon the individual’s receipt of a notice from the Trustees advising (him/her) of the existence of the withdrawal right.
- The maximum amount that an individual can withdraw using the withdrawal right is $11,000.00. When 30 days have passed following an individual’s receipt of notice of the withdrawal right, the right lapses
As the Grantor has taken no action to remove rights of withdrawal arising related with this contribution, the beneficiaries will have the right to withdraw the share of the amount contributed this year, up to $11,000.
The intention of this Crummey letter is to direct you that you have the right to withdraw the amount contributed by the Grantor to the trust between October 17 and the date of this letter. This applicable amount is no more than $11,000.00 per beneficiary.
This right of withdrawal will be valid for 30 days from the date you receive this letter. In case the right is not exercised within the 30-day period, or you decide to waive, the right to withdraw will be invalidated. The funds are going to remain in trust and will be managed as per the provisions of the trust agreement.
In case you wish to exercise the right of withdrawal, please send me a written statement on behalf of your child and articulate your desire to exercise the withdrawal right within the 30-day period.
For record keeping purposes, I will appreciate your signing the Acknowledgement at the end of this letter and submitting it to me in the enclosed envelope, even in the event that you do not intend to exercise the withdrawal rights. This will be evidence that you have received this notice.
Sincerely,
Michael McCann, Trustee
Acknowledgement
I hereby acknowledge receipt of the preceding letter on the day of _____________, 2020. I am aware that the withdrawal rights referred to in the preceding letter will be invalidated if I do not act to exercise such withdrawal right within 30 days following my receipt of this letter. I understand that any exercise of my withdrawal right must be in writing addressed to the Trustee of the trust and mailed within the 30-day period commencing with the date of my receipt of this letter.
Initial…………….
———- We hereby request that you deliver the above-designated funds to us.
———-We hereby waive our rights to withdraw the above amount, and we further waive any right to notice to withdraw any future contributions to the trust.
Date …………………………………….
Name of Beneficiary
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Name of Beneficiary
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Name of Beneficiary
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