Gifts to which of the following trusts will NOT qualify as a gift of present interest for the annual exclusion?

• A. Irrevocable trusts with Crummey provisions
• B. 2503(c) trusts for minors
• C. Simple trusts
• D. Complex trusts

Answer: (D)

Gifts qualify for the annual gift tax exclusion only if they are gifts of a present interest—the beneficiary has an immediate, unconditional right to use or withdraw the transferred property. Irrevocable trusts with Crummey provisions create a temporary withdrawal right for the beneficiary, so the contributed amount is treated as a present‑interest gift. A 2503(c) trust for a minor is specifically designed so the minor has a withdrawal right to the contributions within a set period, also making it a present interest. A simple trust distributes income currently to beneficiaries, giving those beneficiaries an immediate right to the trust’s income, which can satisfy the present‑interest requirement in many cases.

A complex trust is different because the trustee has broad discretion to accumulate income or defer distributions; there isn’t a guaranteed present right to the trust assets for the beneficiaries. That lack of a present, guaranteed right means gifts to a complex trust do not qualify for the annual exclusion.