■ Crummey is Bad with a Special Child: If you have a grandchild with special needs it's a common recommendation to set up a third party special needs trust (SNT) under your will to help care for the special grandchild. Instead set up the SNT now while you are alive (an intervivos trust) so it is something that is more tangible. That will help family understand better what was done. Also, an intervivos trust could serve as a receptacle for any family member that wants to help. Caution well meaning family members not to give funds outright to the special child. Don't casually include a Crummey power (right to withdraw so gifts qualify for the annual exclusion) in the trust since it could affect the special beneficiary's qualification for government benefits.
■ Crummey is Good with a Successful Child: If Junior is an entrepreneurial wizard recommend she not own her next start up entity. Why have it subject to estate tax if the business is a success? Some might transfer the newfound business to a trust for their children (your grandchildren). But they can do better. You as the parent can set up an irrevocable trust with $5,000 giving son a Crummey power (the right to withdraw to qualify for the annual exclusion and grantor trust status) and let son sell equity interests to this trust. This is a beneficiary defective irrevocable trust (BDIT) as to daughter, and she will be the owner (grantor) of the trust for income tax purposes. Keep assets in this trust for the duration of your daughter's life to avoid any marital issues.
■ The Crummey Kid: In Terrorem Clauses are common. If an estate is large enough provide some real dollars behind an interorrem clause. A $500,00 bequest to the bad child, subject to loss if the interorrem clause is violated, has some teeth. If your estate is worth $10 million, as a percentage of the estate it is modest. Do a new will every six months so you create a pattern of consistent bequests. Have a memorandum of why a child was treated differently, and explain to witnesses why you are treating one child differently.
■ Escape Hatch: Negotiate termination fees with an institutional trustee when you're setting up the trust. Be sure the exit isle is clear. Some institutions charge costly back end fees to terminate a trust (maybe you don't want a trustee that would present that as a starting point). Have the arrangements agreed to memorialized in a fee agreement.