CRUMMEY NOTICES FOR IRREVOCABLE LIFE INSURANCE TRUSTS

Each beneficiary of the Irrevocable Insurance Trust is permitted to make annual withdrawals from the trust.  This is called a Crummey power and has the effect of qualifying the premium payments to the Irrevocable Insurance Trust as gifts of a present interest that will be covered under the annual $13,000 gift tax exclusion (which is the amount for 2009).  In this way the premium payments will be easily absorbed by the annual exclusion.  Beneficiaries of the Irrevocable Insurance Trust must be notified of this right of withdrawal on an annual basis. 

In 2006, Pennsylvania proposed new regulations on updated language for trust notices to beneficiaries.  These regulations under the Pennsylvania Uniform Trust Act were finalized with an effective date in 2008. 

These new regulations provide that notices must be sent to all beneficiaries.  The notice must provide the identity of the Grantor (the one who established the trust) and the identity & contact information of the trustee.  The notice must provide the beneficiary with a right to receive a copy of the trust document and notify the beneficiary with the right to request a financial statement for the trust.

Since there are no assets or income for any of the trust, I recommend that the beneficiaries do not request the financial statement.

I hope this information is helpful.

Please contact the Law Offices of William H. Copperthwaite Jr., L.L.C. if you have any questions.

Please note that the information contained in this summary is intended for informational purposes only and is not to be considered tax/legal advice. For specific advice, please contact the Law Offices of William H. Copperthwaite Jr., L.L.C.

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