In the agreement, Givens named herself as the only
contingent remainder beneficiary.
As a report from the law firm Katten Muchin Rosenman notes, "The ability to use essentially unlimited numbers of individuals named as Crummey Power holders to absorb the cost of insurance premiums on trust-owned life insurance (so long as the individual has a
contingent remainder interest in the trust) has long been viewed as abusive by the Internal Revenue Service.
7) Robert and Myra Kraft's grandchildren were the
contingent remainder beneficiaries of these subtrusts.
In Cristofani, (8) the Tax Court allowed a present-interest exclusion based on a
contingent remainder beneficiary's right to withdraw a portion of a gift to the trust.
The problematic part concerns the treatment of the interest held by another JT in which the taxpayer has but a
contingent remainder interest.
X7XP [section]1361(e)(1)(A)(i) prescribes that, prior to 1998, charitable organizations may hold only
contingent remainder interests in an ESBT.
T]he IRS will deny exclusions for powers held by individuals who either have no property interests in the trust except for Crummey powers, or hold only
contingent remainder interests.
Note that, for 1997, certain charitable organizations may hold only
contingent remainder interests and cannot be beneficiaries.
The Service has indicated its intent to deny exclusions for gifts to holders of Crummey withdrawal powers when (1) the powerholders have no beneficial interest in the trust other than their withdrawal powers; (2) the powerholders hold only
contingent remainder interests or discretionary income interests; or (3) the facts and circumstances indicate a prearranged understanding that the powerholder will not exercise his or her withdrawal power.
In this case, the court held that Crummey powers given to the donor's grandchildren, who were
contingent remainder beneficiaries, were effective.
Commissioner, 86 TC 1156 , 1986) which involved nonqualified heirs who held remote
contingent remainder interests that followed a life estate held by the decedent's children.
It was held that the value of the gift of the
contingent remainder interest equaled the market value of the property transferred, minus (1) the present value of the grantor's retained income interest in the property (determined under Sec.
