AEP Accredited Estate Planner
Determining Inclusion Under IRC Section 2033
To determine if an asset is included in a decedent's gross estate under Internal
Revenue Code (IRC) Section 2033, three key questions must be answered:
1. What type of property is being considered for inclusion?
2. Did the decedent have a sufficient interest in the property to warrant its
inclusion?
3. Did the decedent hold that property interest on the date of their death?
IRC Section 2033: The Catch-All Provision
IRC Section 2033 is a broad provision that includes assets in the gross estate. It
essentially states that the value of all property in which the decedent had an interest
on the date of death will be included in their gross estate, unless a specific
exclusion applies. Importantly, only the value of the property interest actually held
by the decedent at the time of death is included.
Example of a Terminable Interest
Consider this example: Brett grants Eric the right to live in Brett's Miami home for
Eric's lifetime, with no further rights. The value of this home will not be included
in Eric's estate when he dies because his interest terminated, but it will be included
in Brett's estate upon his death.
Example of a Remainder Interest
However, if Brett grants the Miami home to Eric's wife, Pat, for her lifetime, with
the remainder to Eric, and Eric dies before Pat, the value of Eric's remainder
interest will be included in his gross estate. This is because his interest didn't
terminate at his death; it simply passed to his heirs. An interest is includable even
if limited, contingent, or remote, provided it doesn't terminate at the decedent's
death. The contingency or remoteness will, however, affect its valuation.
Jointly Owned Property: Common-Law State Example
In a common-law state, if a couple buys a home for $60,000, each spouse has an
acquisition basis of $30,000. If the home's value rises to $200,000 at the husband's
Determining Inclusion Under IRC Section 2033
To determine if an asset is included in a decedent's gross estate under Internal
Revenue Code (IRC) Section 2033, three key questions must be answered:
1. What type of property is being considered for inclusion?
2. Did the decedent have a sufficient interest in the property to warrant its
inclusion?
3. Did the decedent hold that property interest on the date of their death?
IRC Section 2033: The Catch-All Provision
IRC Section 2033 is a broad provision that includes assets in the gross estate. It
essentially states that the value of all property in which the decedent had an interest
on the date of death will be included in their gross estate, unless a specific
exclusion applies. Importantly, only the value of the property interest actually held
by the decedent at the time of death is included.
Example of a Terminable Interest
Consider this example: Brett grants Eric the right to live in Brett's Miami home for
Eric's lifetime, with no further rights. The value of this home will not be included
in Eric's estate when he dies because his interest terminated, but it will be included
in Brett's estate upon his death.
Example of a Remainder Interest
However, if Brett grants the Miami home to Eric's wife, Pat, for her lifetime, with
the remainder to Eric, and Eric dies before Pat, the value of Eric's remainder
interest will be included in his gross estate. This is because his interest didn't
terminate at his death; it simply passed to his heirs. An interest is includable even
if limited, contingent, or remote, provided it doesn't terminate at the decedent's
death. The contingency or remoteness will, however, affect its valuation.
Jointly Owned Property: Common-Law State Example
In a common-law state, if a couple buys a home for $60,000, each spouse has an
acquisition basis of $30,000. If the home's value rises to $200,000 at the husband's
