Crummey powers are withdrawal rights granted to trust beneficiaries that allow them to temporarily access new contributions to the trust, usually up to the annual gift-tax exclusion amount. By giving beneficiaries a present right to withdraw, contributions qualify as present-interest gifts even though beneficiaries typically leave funds in the trust. Crummey powers are most common in irrevocable life insurance trusts that receive premium gifts. Properly structured powers require clear trust language, notice procedures, and real withdrawal windows so the IRS will respect annual exclusion treatment for contributions used to pay policy premiums.

Advisors and estate-planning attorneys use Crummey powers when designing irrevocable life insurance trusts funded with annual exclusion gifts. Trustees send written Crummey notices to beneficiaries each time contributions are made, documenting the amount and withdrawal period. Beneficiaries almost always allow the withdrawal right to lapse so funds can be used for premiums or investment. CPAs rely on Crummey documentation during audits or estate-tax reviews. Understanding Crummey powers helps advisors explain why these technical withdrawal rights are critical to preserving the tax efficiency of trust-owned life insurance strategies.