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Estate planners often worry about minimizing or avoiding estate taxation at death, but gift taxation must be considered when making transfers during lifetime. Smaller gifts can avoid gift taxation due to the gift tax annual exclusion, which allows taxpayers to transfer relatively small amounts of property without any gift tax impact at all. However, if a gift is made to a trust, instead of outright, the gift tax result may differ. In most cases, gifts in trust are intended to qualify for the gift tax annual exclusion by giving the trust beneficiary a right of withdrawal over trust contributions - often referred to as a Crummey power, named after the court decision that first allowed this strategy.

Powers of Appointment are one of the most common ways of adding flexibility to an estate plan. Allowing a beneficiary to redirect trust property at death or to direct a distribution from their trust to another person during lifetime can give the beneficiary a sense of control and involvement, and can also permit revisions to an estate plan when circumstances or law changes warrant. The exercise of a power of appointment, and in some cases its mere existence, can trigger tax consequences as well, some of which may be the reason for including the power itself, and others which could be unintended.