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the date of the surviving spouse’s made on or before July 10, 2007, are before the decedent’s death, then the death, or alternate valuation date, if not included in the gross estate. decedent’s right to use the property or applicable. Do not reduce the value by the retained annuity, unitrust, or other Attach an explanation of how you any annual exclusion that may have interest (whether payable from income figured the includible gift taxes if you do applied to the transfer creating the and/or principal) is the retention of the not include in the gross estate the interest. possession or enjoyment of, or the right entire gift taxes shown on any Form to the income from, the property for 709 filed for gifts made within 3 years of The value of such property included purposes of section 2036. See death. Also attach copies of any in the surviving spouse’s gross estate is Regulations section 20.2036-1(c)(2). pertinent gift tax returns filed by the treated as passing from the surviving decedent’s spouse for gifts made within spouse. It therefore qualifies for the Retained voting rights. Transfers 3 years of death. charitable and marital deductions on with a retained life estate also include 2. Other transfers within 3 years the surviving spouse’s estate tax return transfers of stock in a controlled of death (section 2035(a)). These if it meets the other requirements for corporation after June 22, 1976, if the transfers include only the following: those deductions. decedent retained or acquired voting • Any transfer by the decedent with rights in the stock. If the decedent For additional details, see respect to a life insurance policy within retained direct or indirect voting rights Regulations section 20.2044-1. 3 years of death; or in a controlled corporation, the • Any transfer within 3 years of decedent is considered to have Schedule G—Transfers death of a retained section 2036 life retained enjoyment of the transferred estate, section 2037 reversionary property. A corporation is a controlled During Decedent’s Life interest, or section 2038 power to corporation if the decedent owned Complete Schedule G and file it with revoke, etc., if the property subject to (actually or constructively) or had the the return if the decedent made any of the life estate, interest, or power would right (either alone or with any other the transfers described in (1) through have been included in the gross estate person) to vote at least 20% of the total (5) below, or if you answered “Yes” to had the decedent continued to possess combined voting power of all classes of question 11 or 12a of Part 4—General the life estate, interest, or power until stock. See section 2036(b)(2). If these Information. death. voting rights ceased or were Report the following types of These transfers are reported on relinquished within 3 years of the transfers on this schedule: Schedule G, regardless of whether a decedent’s death, the corporate gift tax return was required to be filed interests are included in the gross IF. . . AND . . . THEN . . . for them when they were made. estate as if the decedent had actually However, the amount includible and the retained the voting rights until death. the decedent at the time of for purposes of information required to be shown for made a transfer the transfer, the sections 2035 The amount includible in the gross from a trust, transfer was and 2038, treat the transfers are determined: estate is the value of the transferred from a portion the transfer as • For insurance on the life of the property at the time of the decedent’s of the trust that made directly decedent using the instructions to was owned by by the death. If the decedent kept or reserved Schedule D (attach Forms 712); the grantor decedent. an interest or right to only a part of the • For insurance on the life of under section transferred property, the amount another using the instructions to 676 (other than includible in the gross estate is a by reason of Schedule F (attach Forms 712); and corresponding part of the entire value section 672(e)) • For sections 2036, 2037, and by reason of a of the property. 2038 transfers, using paragraphs (3), power in the A retained life estate does not have (4), and (5) of these instructions. grantor, to be legally enforceable. What matters 3. Transfers with retained life Any such is that a substantial economic benefit transfer within estate (section 2036). These are the annual gift was retained. For example, if a mother transfers by the decedent in which the tax exclusion is transferred title to her home to her decedent retained an interest in the not includible in daughter but with the informal transferred property. The transfer can the gross understanding that she was to continue be in trust or otherwise, but excludes estate. living there until her death, the value of bona fide sales for adequate and full the home would be includible in the consideration. 1. Certain gift taxes (section mother’s estate even if the agreement Interests or rights. Section 2036 2035(b)). Enter at item A of Schedule G would not have been legally applies to the following retained the total value of the gift taxes that enforceable. interests or rights: were paid by the decedent or the estate 4. Transfers taking effect at death • The right to income from the on gifts made by the decedent or the (section 2037). A transfer that takes transferred property; decedent’s spouse within 3 years of effect at the decedent’s death is one • The right to the possession or death. under which possession or enjoyment enjoyment of the property; and The date of the gift, not the date of can be obtained only by surviving the • The right, either alone or with any payment of the gift tax, determines decedent. A transfer is not treated as person, to designate the persons who whether a gift tax paid is included in the one that takes effect at the decedent’s shall receive the income from, or gross estate under this rule. Therefore, death unless the decedent retained a possess or enjoy, the property. you should carefully examine the Forms reversionary interest (defined below) in Retained annuity, unitrust, and 709 filed by the decedent and the the property that immediately before the other income interests in trusts. If a decedent’s spouse to determine what decedent’s death had a value of more decedent transferred property into a part of the total gift taxes reported on than 5% of the value of the transferred trust and retained or reserved the right them was attributable to gifts made property. If the transfer was made to use such property, or the right to an within 3 years of death. before October 8, 1949, the annuity, unitrust, or other interest in reversionary interest must have arisen For example, if the decedent died on such trust for the property decedent so by the express terms of the instrument July 10, 2010, you should examine gift transferred for decedent’s life, any of transfer. tax returns for 2010, 2009, 2008, and period not ascertainable without 2007. However, the gift taxes on the reference to the decedent’s death, or A reversionary interest is generally 2007 return that are attributable to gifts for a period that does not, in fact, end any right under which the transferred -21- Part Instructions