§2038 — Title 26 Internal Revenue Code | U.S. Code

Summary

Count the value of property a person transferred into the total of their estate for tax purposes if they did not really sell it for full fair value and they kept a right to change who got the benefit, or if they gave up that right within the 3-year period before they died. This applies whether the person could use that right alone or with others. For transfers made on or before June 22, 1936, the second rule in the law is the one that decides if the interest is included. Power to alter, amend, revoke, or terminate: the right to change or end someone’s future benefit from the property. That right is treated as still existing on the date of death even if using it required giving notice or waiting a set time. If notice wasn’t given or the right wasn’t used before death, treat it as if it were used on the date of death and adjust the values accordingly.

Title 26, §2038

Internal Revenue Code — Source: USLM XML via OLRC

(a)The value of the gross estate shall include the value of all property—

(1)To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power (in whatever capacity exercisable) by the decedent alone or by the decedent in conjunction with any other person (without regard to when or from what source the decedent acquired such power), to alter, amend, revoke, or terminate, or where any such power is relinquished during the 3 year period ending on the date of the decedent’s death.

(2)To the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power during the 3 year period ending on the date of the decedent’s death. Except in the case of transfers made after June 22, 1936, no interest of the decedent of which he has made a transfer shall be included in the gross estate under paragraph (1) unless it is includible under this paragraph.

(b)For purposes of this section, the power to alter, amend, revoke, or terminate shall be considered to exist on the date of the decedent’s death even though the exercise of the power is subject to a precedent giving of notice or even though the alteration, amendment, revocation, or termination takes effect only on the expiration of a stated period after the exercise of the power, whether or not on or before the date of the decedent’s death notice has been given or the power has been exercised. In such cases proper adjustment shall be made representing the interests which would have been excluded from the power if the decedent had lived, and for such purpose, if the notice has not been given or the power has not been exercised on or before the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of his death.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1976—Subsec. (a)(1). Pub. L. 94–455, § 2001(c)(1)(K)(i), substituted “during the 3-year period ending on the date of the decedent’s death” for “in contemplation of decedent’s death”. Subsec. (a)(2). Pub. L. 94–455, § 2001(c)(1)(K)(ii), substituted “during the 3-year period ending on the date of the decedent’s death” for “in contemplation of his death”. Subsec. (c). Pub. L. 94–455, § 1902(a)(3), struck out subsec. (c) which covered the effect of a disability in certain cases by relating a mental disability to relinquish a power to a power, the relinquishment of which would be deemed not to be a transfer for purposes of chapter 4 of the Internal Revenue Code of 1939. 1962—Subsec. (a). Pub. L. 87–834 struck out provisions which excepted real property situated outside of the United States. 1959—Subsec. (c). Pub. L. 86–141 added subsec. (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 1976 AmendmentAmendment by section 1902(a)(3) of Pub. L. 94–455 applicable to estates of decedents dying after Oct. 4, 1976, see section 1902(c)(1) of Pub. L. 94–455, set out as a note under section 2012 of this title. Amendment by section 2001(c)(1)(K)(i), (ii) of Pub. L. 94–455 applicable to estates of decedents dying after Dec. 31, 1976 but not to transfers made before Jan. 1, 1977, see section 2001(d)(1) of Pub. L. 94–455, set out as a note under section 2001 of this title.

Effective Date

of 1962 AmendmentAmendment by Pub. L. 87–834 applicable to estates of decedents dying after Oct. 16, 1962, except as otherwise provided, see section 18(b) of Pub. L. 87–834, set out as a note under section 2031 of this title.

Effective Date

of 1959 Amendment Pub. L. 86–141, § 2, Aug. 7, 1959, 73 Stat. 289, provided that: “The amendment made by the first section of this Act [amending this section] shall apply only with respect to estates of decedents dying after August 16, 1954. No interest shall be allowed or paid on any overpayment resulting from the application of the amendment made by the first section of this Act with respect to any payment made before the date of the enactment of this Act [Aug. 7, 1959].”

§2038 Revocable Transfers

Summary

Title 26, §2038

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Effective Date

Citations & Metadata