Avoid Powers to Revoke, Alter, Amend, or Terminate

Abstract

This article provides an introduction to section 2038, which provides that a decedent’s estate includes the value of all interests in property transferred by the decedent over which the decedent has a power to revoke, alter, amend, or terminate beneficial interests. After a discussion of the statutory language, this article provides an overview of the problems that can arise under section 2038, with special attention to cases in which powers held by a trustee will be imputed to a trust’s grantor. There is a short quiz at the end of the article that both experienced and beginning practitioners can use to gauge their understanding of section 2038.

Keywords: trusts, incomplete gifts, gifts, revoke, alter, amend, terminate, 2038, estate tax, gross estate

JEL Classification: K34, K19