IRC Section 2036(a)(1) has provided since 1931 that a decedent's gross estate includes property he or she has transferred in trust or otherwise during lifetime other than for full and adequate consideration in money or money's worth if the decedent retained the right to the income from that property. The right to the income need not be express but may be implied and need not be legally enforceable. For example, if there is an implied understanding between the grantor and the trustee that the trustee will distribute property to the grantor, the trust will be included in the grantor's estate.
Gideon Rothschild, Douglas J. Blattmachr, Mitchell M. Gans, and Jonathan G. Blattmachr,
IRS Rules Self-Settled Alaska Trust Will Not Be In Grantor's Estate, 37 Est. Plan. 3
Available at: http://scholarlycommons.law.hofstra.edu/faculty_scholarship/523