Crummey five-and-five
Certified Financial Planner glossary · Certified Financial Planner
Definition
A lapse of a withdrawal right is not a taxable gift to the extent of the greater of $5,000 or 5% of the trust corpus.
Crummey five-and-five in plain English
A beneficiary lets a Crummey withdrawal right lapse and someone fears a taxable gift of the full lapse. Under the five-and-five rule, a lapse is not a taxable gift to the extent of the greater of 5,000 or 5% of the trust corpus. That statutory shield is not indexed and is not the same number as the 19,000 (2026) annual exclusion. Keep five-and-five (lapse protection) mentally separate from the annual exclusion that qualifies the present-interest gift.
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