When a power of appointment (the right to say who is to receive property in trust) is so extensive that it approaches actual ownership of the affected property, property subject to the power will be included in the gross estate of the person who holds the power. I.R.C. Section 2041.
Property must be included in a decedent's gross estate if the lifetime gift the decedent made is contingent upon the donee surviving the decedent. If the donee can obtain possession through ownership only by being alive at the time the donor dies, and the donor retained a significant right to regain the property (either while living or through the right to dispose of it at death), the value of the property transferred (not the value of the interest retained) will be included. The right to regain the property is called a reversionary interest. The reversionary interest must be worth more than five percent of the property's value in order to cause inclusion in the decedent's gross estate. I.R.C. section 2037.
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