I don’t know about that. It’s more a contract agreed upon by the benefactor, sort of like- ok I will sell you the house but you can’t have it until we die; and we have the right to buy it back should we have a change of heart. Sign here_____ It’s also known as a “living will”.
Still liable for gift tax possibly, but only on the value at the time the will was made. There is a sale involved, so The IRS would have to contest it. I haven’t known anyone else who has done this to be chased down by the IRS afterwards, Maybe because the title is transferred at the time of this contract, and isn’t caught.
It isn’t designed to evade taxes as much as it is to avoid fights over the estate one you do die by other familly members.
1) A "living will" has nothing to do with management or transfer of assets. Rather, it's a document by which a person directs his caregiver not to artificially prolong the dying process in the event he suffers an injury or illness which is otherwise fatal in the short term.
2) A "living trust" is a marketing term often given to a revocable intervivos trust. Because the trust is revocable, transfers to it are largely ignored by the IRS and assets held by it are included in the settlor's gross estate. In an estate planning context, virtually all living trusts are snake oil. Maybe they do you no harm, but neither do they do you any particular good. Again, not getting audited does not make a tax avoidance plan legal any more than not getting caught robbing a bank makes that activity legal.