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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10437
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Were their annual exclusions from 1990 to 2002 (?) when the

Customer Question

Were their annual exclusions from 1990 to 2002 (?) when the # ***** $11,000? I ask this pertaining to Crummey Exclusions for gifts to an ILIT (insurance trust). Client had a ILIT going back to 1990 but never got Crummey notices signed. TY DG
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: What CPA will help? Yours? Many CPA's don't know what a Crummey notice is
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 6 months ago.
Category: Tax
Expert:  Lane replied 6 months ago.

Hi,

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There were no specific exclusions during that time period, or any other, for crummey notices.

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Depending on the funding frequency, however, several variations have emerged.

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The MOST AGGRESSIVE : I have seen CA attorneys draft and send a letter that gives notice, upon the first funding, requiring a certified reply that the client understands that they have the right upon any future premiums, and once annually in addition, but then not send future notices.

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Not a best practice, in my opinion.

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Where something similar IS seen is when there is a single premium involved.

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Bot***** *****ne?

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The inherent disadvantage of relying upon the use of instructions in the instrument of transfer to create Crummey powers is that these instructions must be provided each time a gift is made to the trust and cannot be provided after the gift is made.

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Further, if the instructions are not sufficiently specific with regard to who is to possess the withdrawal power or fails to address other material terms of the withdrawal right (such as the amount), the IRS may not accept the external instructions as sufficient to create a present interest.

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SO the letter serves as a second layer.

Expert:  Lane replied 6 months ago.

But for them to succeed in qualifying gifts for the annual exclusion, the rules must be followed carefully.

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But the rules speak only to "reasonabletime and opportunity" and "prompt notice"

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That is, the beneficiaries must receive prompt notice that a gift has been made and be given reasonable time and opportunity to request a withdrawal.

Expert:  Lane replied 6 months ago.

As I look back to your question, I now wonder if you are simply asking about the AMOUNT OF the annual exclusion;

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If that's the case here are the amounts.

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$10,000, for years 1987 to 2001 (moved from 3,000 to 10,000 - 1986 to 1987)

Expert:  Lane replied 6 months ago.

Were premiums paid for each of those years (also, what state)?

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Let me know

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lane

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I have a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, on three continents, since 1986.

Expert:  Lane replied 6 months ago.

Questions?