# Crummey Power: Definition and How It Works in California

> A Crummey power is a beneficiary's temporary right to withdraw a gift made to an irrevocable trust.

Source: https://ridleylawoffices.com/estate-planning-glossary-california/crummey-power/

By Eric Ridley, attorney, Ridley Law. Updated October 2026.

A **Crummey power** is a beneficiary’s temporary right to withdraw a gift made to an irrevocable trust. That right makes the gift a present interest, so it qualifies for the annual gift tax exclusion, which is $19,000 per recipient in 2026, instead of using up lifetime exemption.

## How it works in California

Ridley Law’s [guide to irrevocable life insurance trusts](https://ridleylawoffices.com/do-i-need-an-irrevocable-life-insurance-trust-in-my-estate-plan/) shows Crummey powers in their most common setting. The annual exclusion under [26 U.S.C. § 2503(b)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2503&num=0&edition=prelim) applies only to gifts of present interests, and a gift into a trust is normally a future interest. The 2026 amount is $19,000 ([Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)).

The power takes its name from [*Crummey v. Commissioner* (9th Cir. 1968) 397 F.2d 82](https://www.courtlistener.com/opinion/280774/d-clifford-crummey-v-commissioner-of-internal-revenue/). The trust let each child demand a share of yearly additions, and the Ninth Circuit allowed the exclusions even for minor children, reversing the Tax Court on that point. When a beneficiary lets the power lapse, the lapse is treated as a release, and so as a gift by the beneficiary, only to the extent the amount exceeds the greater of $5,000 or 5 percent of the trust assets ([26 U.S.C. § 2514(e)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2514&num=0&edition=prelim)).

## Why it matters

Crummey powers let a family fund an insurance trust or a long-term trust each year without touching the $15 million lifetime exemption. In a hypothetical, a married couple with three children, each holding a withdrawal right, can put $114,000 a year into the trust (two parents times three children times $19,000) as annual exclusion gifts, provided the trust handles the $5,000 or 5 percent lapse limit described below.

## Common mistakes

Skipping the notice letters. Most planners send a written notice each time a gift is made, because a withdrawal right nobody knows about is hard to defend as a present interest. Giving each beneficiary a withdrawal right larger than $5,000 or 5 percent without a hanging power or other fix, which turns each lapse into a gift by the beneficiary. And making gifts the trust can’t hold open for the withdrawal period.

## Related terms

- [Dynasty Trust](https://ridleylawoffices.com/estate-planning-glossary-california/dynasty-trust/): annual exclusion gifts to a dynasty trust usually rely on Crummey powers.
- [Spousal Lifetime Access Trust (SLAT)](https://ridleylawoffices.com/estate-planning-glossary-california/spousal-lifetime-access-trust/): children named in a SLAT can hold withdrawal rights over annual gifts.
- [Irrevocable Life Insurance Trust (ILIT)](https://ridleylawoffices.com/estate-planning-glossary-california/irrevocable-life-insurance-trust/): the trust that most often uses Crummey powers to pay premiums.

Part of the [California estate planning glossary](https://ridleylawoffices.com/estate-planning-glossary-california/). For the full treatment, see [Irrevocable Life Insurance Trust (ILIT): How It Works in California (2026)](https://ridleylawoffices.com/do-i-need-an-irrevocable-life-insurance-trust-in-my-estate-plan/).