ILLUSORY-TRANSFER DOCTRINE

illusory-transfer doctrine.The rule that the law disregards an inter vivos gift over which the donor retains so much control that there is no good-faith intent to relinquish the transferred property. • The illusory-transfer doctrine is usu. applied to inter vivos trusts in which the settlor retains an excessive control or an interest — for instance, one in which the settlor retains the income for life, the power to revoke, and substantial managerial powers. The leading case on this doctrine is Newman v. Dore, 9 N.E.2d 966 (N.Y. 1937). See colorable transfer under TRANSFER.

[Blacks Law 8th]