-40-
Regulations further explain that “An interest or right is treated
as having been retained or reserved if at the time of the
transfer there was an understanding, express or implied, that the
interest or right would later be conferred.” Sec. 20.2036-1(a),
Estate Tax Regs.
Given the language used in the above-quoted provisions, it
has long been recognized that “The general purpose of this
section is ‘to include in a decedent’s gross estate transfers
that are essentially testamentary’ in nature.” Ray v. United
States, 762 F.2d 1361, 1362 (9th Cir. 1985) (quoting United
States v. Estate of Grace, 395 U.S. 316, 320 (1969)). The
Supreme Court has defined as “essentially testamentary” those
“transfers which leave the transferor a significant interest in
or control over the property transferred during his lifetime.”
United States v. Estate of Grace, supra at 320. Accordingly,
courts have emphasized that the statute “describes a broad scheme
of inclusion in the gross estate, not limited by the form of the
transaction, but concerned with all inter vivos transfers where
outright disposition of the property is delayed until the
transferor’s death.” Guynn v. United States, 437 F.2d 1148, 1150
(4th Cir. 1971).
As used in section 2036(a)(1), the term “enjoyment” has been
described as “synonymous with substantial present economic
benefit.” Estate of McNichol v. Commissioner, 265 F.2d 667, 671
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