IRC Section 2037 covers transfers where enjoyment of property by a beneficiary depends on surviving the transferor, and the transferor retains a significant reversionary interest. In simple terms, it addresses lifetime transfers that are designed to take effect at or after death. Section 2037 can cause property to be included in a decedent's taxable estate if three conditions are generally met: the decedent made a transfer during life, possession or enjoyment of the property is conditioned on the beneficiary surviving the decedent, and the transferor retained a reversionary interest that exceeds a specified threshold of value. Although invoked less frequently than other estate inclusion sections, it plays a role in evaluating complex trust arrangements, particularly where a grantor could regain property if beneficiaries predecease them. In the life insurance context, it may affect certain trust or entity designs where rights to policy values or proceeds are tied to survival conditions and reversionary interests.

In practical use, advisors typically encounter IRC Section 2037 as part of a holistic review of estate inclusion risks across Sections 2035 through 2042. Estate planning attorneys may flag that a proposed trust or insurance structure gives beneficiaries an interest only if they outlive the grantor, while also giving the grantor a meaningful chance to regain the property if they do not. That combination can trigger 2037 inclusion. For example, a grantor might transfer assets into a trust that reverts back to them if all named beneficiaries die first, and the value of that reversionary interest exceeds the statutory threshold. Advisors, attorneys, and valuation professionals collaborate to measure the reversion value, test whether 2037 applies, and, if necessary, redesign the arrangement with alternative contingent beneficiaries or modified terms. For insurance producers, 2037 is primarily a background rule, but awareness helps them recognize when seemingly minor survival conditions or reversionary language in documents could have real estate tax consequences.