While the IRS acknowledges that in Cristofani not all of the power holders for whom a gift tax exclusion was allowed by the court had an income or vested remainder
interest in the trust (although those that did not were contingent beneficiaries), it does warn that it will continue to deny exclusions for Crummey power holders where the withdrawal rights have no substance, regardless of the beneficiaries' economic interest in the trust.
First, the trustee--not the holder of the vested remainder
interest subject to divestiture--is effectuating the alleged transfer.
First, the IRS used an economic analysis, recognizing that current income beneficiaries and persons with vested remainder interests have an economic incentive to consider whether to receive the immediate benefit of a current withdrawal pursuant to the Crummey power or to receive a future (and presumably larger) benefit by allowing the Crummey power to lapse.
Under a similar economic analysis, the IRS approves of granting Crummey powers to current income beneficiaries and persons with vested remainder interests because these persons must weigh the withdrawal right against their long-term economic interest in the trust.
The homestead passes to the surviving spouse, estranged or not, for life with a vested remainder
in the lineal descendants of the homeowner living at his or her death, per stirpes.
It is now clear that beneficiaries need not have a vested income interest or a vested remainder
interest to be considered in possession of a present interest.
The court rejected the notion that Crummey requires that the beneficiaries of a trust have a vested present interest or vested remainder
interest in the trust corpus or income to qualify under Sec.
They emphasize distinguishing among contingent remainders, executory interests, and vested remainders
subject to divestment, and focus on the common law of estates in land and future interests in England in about 1700, covering future interests before and after 1536.
The traditional categorization of possessory estates and future interests--that great structure of doctrinal nebulae: reversions, rights of entry, possibilities of reverter, vested remainders
, contingent remainders, and executory interests--developed in an England of aristocratic family dynasties and primogeniture, when the maintenance of feudal dues and seisin were still important, when competition between the courts of Chancery and of Common Law was most severe, when modes of conveyancing were still primitive and formal, and before the community had developed generalized notions of freedom of contract and private volition.