The name given to a "Crummey Trust" has nothing to do with the quality of the trust drafting. This type of trust is named after a court case, Crummey v. Commissioner, 397 F.2d 82 (9h Cir. 1954). The case decided that taxpayers could use their annual gift tax exclusion to transfer money to a trust fund that would not become part of their taxable estate.

Since then, the courts have recognized that if the trust instrument gives a beneficiary the power to demand immediate possession and enjoyment of corpus or income, the beneficiary has a present interest, and the money given to the trust fund is not a part of the donor-taxpayer's estate.

To qualify as a Crummey trust, the Trustee must give each beneficiary written notification of his/her right to withdraw some or all of the contributions to the trust, within a period of time that satisfies the requirement for a gift of a "present interest."

But if the beneficiary's power to withdraw the gift is "make believe" or illusory, and effectively deprives the beneficiary of the power to withdraw, the gift to the trust does not qualify as a present interest that is eligible for the gift tax annual exclusion under section 2503(b).

Section 2503(c) give guidance to people who want to transfer funds to a Crummey Trust for the benefit of minor. No part of a gift to an individual who has not attained the age of 21 years on the date of such transfer shall be considered a gift of a future interest in property if the gift:

1. may be expended by, or for the benefit of, the donee before his attaining the age of 21 years, and
2. will to the extent not so expended— (A) pass to the donee on his attaining the age of 21 years, and (B) in the event the donee dies before attaining the age of 21 years, be payable to the estate of the donee or as he may appoint under a general power of appointment as defined in section 2514 (c).

The Trust can be designed to continue past the beneficiary's 21st birthday if the beneficiary is allowed to compel distribution, or extend the term of the Trust.