Generally, there are two basic types of withdrawal rights that can be included in a trust agreement: "full" withdrawal rights and "5 & 5" withdrawal rights. A beneficiary with a "full" withdrawal right has the right to withdraw all or any part of his or her pro rata share of every gift, up to the $19,000 annual exclusion. A full withdrawal right thus takes full advantage of the gift tax annual gift tax exclusion. So, in the above example, if a husband and wife with three children give $114,000 to a trust for their children, and if the children all have full withdrawal rights, each child has the power to withdraw up to $38,000, and the full $114,000 is covered by the parents' combined exclusions.

A beneficiary with a 5 & 5 withdrawal right is generally limited to withdrawing the lesser of the $19,000 annual exclusion amount and the "5 & 5" amount. The 5 & 5 amount is the greater of $5,000 or 5% of the value of the trust on the last day of the year in which the gift is made. Also, while the present interest exclusion is computed on a per donor per donee basis, the 5 & 5 amount is computed on a simple per donee basis: each donee gets only one 5 & 5 amount per year even if there are multiple donors.

So, returning to the above example, if a husband and wife with three children give $114,000 to a trust for their children (and that is the only amount in the trust), and if the children all have 5 & 5 withdrawal rights, the 5 & 5 amount limits each child's withdrawal right to $5,700, and only $17,100 of the gift (3 x $5,700) qualifies for the exclusion; the remaining $96,900 counts against the parents' respective $13,990,000 lifetime gift tax exemption amounts. However, if the value of the trust (including the $114,000 gift) were at least $760,000, then the 5 & 5 amount would not limit the withdrawal right (because 5% of $760,000 is $38,000), and the full $114,000 would qualify for the exclusion.