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.
Technical Advice Memorandum 9419007 provides a cautionary tale on how the IRS may rule where a trustee uses decanting essentially to permit a beneficiary to sit on a
contingent remainder interest throughout her life (pending her mother's death) and then, as part of her estate planning, convince the trustee to limit her rights to her trust share to a limited power of appointment once she feels that she no longer needs the trust share to provide her with support during her lifetime.
However, a Tax Court case has held that a powerholder who is a beneficiary with only a
contingent remainder interest would also qualify for the annual exclusion (e.g., grandchild would only take under the trust if his parent, who is the primary beneficiary, were deceased).
1999) (en banc) (
contingent remainder holders are "owners" entitled to notice of foreclosure of deed of 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.
In Cristofani, the provision in the trust instrument giving the beneficiaries withdrawal powers included a notice requirement; however, the issue before the Tax Court was whether the withdrawal powers of
contingent remainder beneficiaries were present-interest gifts.
In this case, the court held that Crummey powers given to the donor's grandchildren, who were
contingent remainder beneficiaries, were effective.
