The 5-and-5 Power in Estate Planning: How It Works With Crummey Gifts, Income Tax, Creditors and the Estate Tax
A 5-and-5 power lets a trust beneficiary withdraw the greater of $5,000 or 5% of trust assets each year without gift or estate tax when the right lapses. Here is how the rule interacts with Crummey gifts, hanging powers, income tax under Section 678, creditor protection and the estate tax at death.
