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Power Of Withdrawal

Power of withdrawal is a legal term that describes a persons right to transfer property that is above or excluded by the powers of a trustee but which is limited either by a predefined amount or which is only useable upon the approval of the trustee. Family trusts often use the power of withdrawal clause to prevent children from misusing funds in a trust. In order to access these funds they must go through the trustee; however, the power of withdrawal can stipulate an amount that they can withdraw for their own use prior to reaching the age of maturity set by the trust. Using this statement in the trust allows the creator of the trust some flexibility in how funds are dispersed to the beneficiaries of the trust.

Fast Facts

  • The power of withdrawal in most cases is 5% of the contributions made yearly to the trust or $5000, but not more than $11,000.
  • The power of withdrawal are often referred to as Crummey powers due to the Crummey v. Comm'r case of 1968 on which they are based.

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