@dmertz wrote:
For there to be a de facto life estate, it seems that there would have to be some evidence that the mother retained an interest in the property (an agreement that mother could remain in the home until then mother's death and the siblings were not permitted to sell the property prior to that):
https://casetext.com/case/shedlock-v-dir-div-of-taxation
That "agreement" could be implied per Treas. Reg. § 20.2036-1(c):
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.
The fact that the mother held and occupied the property as her home for decades and continued her occupancy after executing the quitclaim deed, without objection from the siblings, should be sufficient to imply that she intended to convey a remainder interest and retain a life estate for herself.
Further, with traditional life estates, the property cannot be sold without the express permission of the life tenant. In fact, the life tenant cannot convey the property without the consent of those holding a remainder interest (Lady Bird deeds, legal in five states, are an exception to that rule). Either party can convey whatever interest they have in the property (e.g., the remainder interest can be sold).
Your cite is to an NJ case which, in turn, cited the NJ SCT:
(1) the grantor or settlor must transfer some property, or interest therein, while retaining for his lifetime some or all of the economic benefits therefrom; (2) there must be a consequent postponement of enjoyment on the part of the grantee, promisee or other beneficiary; and (3) both the grantor's retention and the grantee's postponement of enjoyment must be for a period determinable by reference to the grantor's death.
The foregoing was then apparently "rephrased" but, regardless, that decision and the NJ SCT's factors carry no weight in the federal system and there is a federal case, fairly on point (but old), referring to Section 2036.
