The $11,000 gift tax annual exclusion ($12,000 for gifts made in 2006) is available only for gifts of present interests. A gift to a trust for the benefit of a particular beneficiary is usually a gift of a present interest only if the trustee is required to distribute all of the income of the trust no less frequently than annually. If a trust does not have income because its assets are invested in non-income paying property (e.g., unproductive real estate or artwork), a gift to that trust will be treated as a gift of a future interest.However, the exclusion is allowed for a gift in trust to a minor, if the trust property and the income from that property may be (but don't have to be) spent by or for the minor before he reaches age 21, and to the extent not so spent will pass to the minor when he becomes 21.
Observation: If the beneficiary has the power to withdraw, there's always the possibility that she might actually do so. In most cases, holders of Crummey powers understand that they're expected not to exercise their powers (although that expectation should always remain unwritten, because if there's any evidence of it, the Internal Revenue Service will use that evidence to say that the power was illusory). However, there's no guarantee that the power holder will honor that expectation. Separate grantors will sometimes tell the holder (but not in writing) that if the power is exercised, there may be no future gifts to the trust.
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