826 / Are dower and curtesy interests and their statutory substitutes includable in a decedent’s gross estate under IRC Section 2034?

IRC Section 2034 specifically includes in the gross estate the interest of the decedent’s surviving spouse “existing at the time of the decedent’s death as dower or curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy.”

At one time, certain courts held that dower and curtesy interests were not subject to death taxes because they were not received by transfer from the decedent. IRC Section 2034 was enacted to make sure that these marital interests would not escape the federal estate tax. The full value of the property without deduction of the surviving spouse’s interest is includable in the gross estate.