Hanging power
Certified Financial Planner glossary · Certified Financial Planner
Definition
A drafting device carrying forward the portion of a Crummey withdrawal right that exceeds the five-and-five limit.
Hanging power in plain English
A large Crummey gift creates a withdrawal right bigger than the five-and-five safe harbor, and a plain lapse would look like a taxable release. Hanging power is the drafting device that carries forward the portion of the Crummey withdrawal right that exceeds the five-and-five limit, so the excess does not lapse into a gift problem all at once. It is a trust-drafting fix tied to annual demand rights, not a hanging tax credit or a GST allocation trick. Pair it mentally with five-and-five whenever lapse taxation appears.
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