The provision where beneficiaries must withdraw funds within 30 days after being notified is known as what?

The correct answer is the Crummey power, which refers to a specific provision that allows beneficiaries of a trust or an irrevocable life insurance trust to withdraw funds within a certain timeframe after being notified. Typically, this timeframe is set at 30 days, and the purpose of this ability is often linked to enabling gift tax exclusions. By granting beneficiaries this withdrawal power, the trust creator can make gifts to beneficiaries without incurring gift taxes, as long as the beneficiaries respond within the specified period.

This provision directly engages with the tax implications of gifting by creating a scenario where the contribution to the trust is considered a present interest, which qualifies for the annual exclusion under the gift tax regulations. Therefore, the Crummey power is significant in estate planning as it allows for strategic financial management and tax advantages.