Case Study Of Grantor's Gross Estate

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Register to read the introduction… This case does not meet the second test which means that the decedent retained no reversionary interest in the property, no part of the property is includible in the decedent’s gross estate, even though possession or enjoyment of the property could be obtained by Y or Z only by surviving the decedent.

(3) What interest or interests, if any, are included in Grantor’s gross estate under Section 2037 (assuming the 5 percent test is met) in the following situations:
(a) Grantor creates a trust with income to Spouse, S, for life, reversion to Grantor is living and, if not, to A or A’s estate. Grantor predeceases S and
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Also, the decedent retained reversionary interest which immediately before his death exceeded 5 percent of the value of the property.
What are included? Only value of A’s interest is included in grantor’s gross estate. Grantor cannot get a reversionary interest if he is dead. For grantor’s spouse, she did not meet the first 2037 test.
(b) What is the result if Grantor gave the reversion to A and died within two years of the gift?
If grantor gave the reversion to A, grantor will not have the reversionary interest. In this case, Section 2037 does not apply because that grantor does not have a reversionary interest. And also A can possess or enjoy the property without surviving the
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Thurs property is not included in the decedent’s gross estate if, immediately before the decedent’s death, possession or enjoyment of the property could have been obtained by any beneficiary either by surviving the decedent or through the occurrence of some other event such as the expiration of a term of years. However, if a consideration of the terms and circumstances of the transfer as a whole indicates that the “other event” is unreal and if the death of the decedent does, in fact, occur before the “other event”, the beneficiary will be considered able to possess or enjoy the property only by surviving the decedent.

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