829 / When are gifts taking effect at death includable in a decedent’s gross estate under IRC Section 2037?

IRC Section 2037 requires inclusion in the gross estate of any interest in property transferred by the decedent if both of the following conditions are met:

(1) Possession or enjoyment of the property can, through ownership of the transferred interest, be obtained only by surviving the decedent; and

(2) The decedent has retained a reversionary interest in the property which, immediately before his death, exceeded 5 percent of the value of the property.

A simple example would be a transfer to an irrevocable living trust under the following terms: income to grantor’s wife for her life; property to revert to grantor if living at wife’s death and if not, property to their daughter.