Estate of Cristofani v. Commissioner

Maria Cristofani created an irrevocable trust giving her children (Frank and Lillian) and five minor grandchildren each the contractual right to withdraw up to $10,000 within fifteen days of any contribution; trust income went to Frank and Lillian, with corpus passing to them at Maria's death (or to their own children if they predeceased her). Maria made two $70,000 contributions in 1984 and 1985; none of the grandchildren ever exercised their withdrawal rights, though there was no agreement that they wouldn't. Maria's estate (plaintiff) claimed seven annual gift tax exclusions for each contribution year, but the Commissioner (defendant) disallowed the grandchildren's exclusions, arguing their merely contingent remainder interest in the trust (as opposed to Frank and Lillian's vested interest) meant they lacked a genuine present interest under the Crummey framework.