Form 706 (Draft) - United States Estate (And Generation-Skipping Transfer) Tax Return - 2016 Page 37
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55the property interest is, for the entry on
installments, or is entitled to interest on
unless you file the amended return on or
Schedule M, reduced by the value of
them, with all amounts payable during
before the due date for filing the original
any asset or assets that, if passing from
the life of the spouse, payable only to
Form 706.
the decedent to the surviving spouse,
the surviving spouse; (b) the installment
The effect of the election is that the
would be nondeductible terminable
or interest payments are payable
property (interest) will be treated as
interests. Examples of property interests
annually, or more frequently, beginning
passing to the surviving spouse and will
that may be paid or otherwise satisfied
not later than 13 months after the
not be treated as a nondeductible
out of any of a group of assets are a
decedent's death; (c) the surviving
terminable interest. All of the other
DRAFT AS OF
bequest of the residue of the decedent's
spouse has the power, exercisable in
marital deduction requirements must
estate, or of a share of the residue, and
favor of the surviving spouse or of the
still be satisfied before you may make
a cash legacy payable out of the general
estate of the surviving spouse, to
this election. For example, you may not
estate.
appoint all amounts payable under the
make this election for property or
contract; (d) the power of appointment
Example. A decedent bequeathed
property interests that are not included
is exercisable by the surviving spouse
$100,000 to the surviving spouse. The
in the decedent's gross estate.
June 16, 2016
alone and (whether exercisable by will
general estate includes a term for years
or during life) is exercisable by the
Qualified terminable interest proper-
(valued at $10,000 in determining the
surviving spouse in all events; and (e)
ty. Qualified terminable interest
value of the gross estate) in an office
no part of the amount payable under the
property is property (a) that passes from
building, which interest was retained by
contract is subject to a power in any
the decedent, (b) in which the surviving
the decedent under a deed of the
other person to appoint any part to any
spouse has a qualifying income interest
building by gift to a son. Accordingly,
person other than the surviving spouse.
for life, and (c) for which election under
the value of the specific bequest
If these five conditions are satisfied only
section 2056(b)(7) has been made.
entered on Schedule M is $90,000.
for a specific portion of the proceeds,
The surviving spouse has a
Life estate with power of appoint-
see Regulations section
qualifying income interest for life if the
ment in the surviving spouse. A
20.2056(b)-6(b) to determine the
surviving spouse is entitled to all of the
property interest, whether or not in trust,
amount of the marital deduction.
income from the property payable
will be treated as passing to the
annually or at more frequent intervals, or
Charitable remainder trusts. An
surviving spouse, and will not be treated
has a usufruct interest for life in the
interest in a charitable remainder trust
as a nondeductible terminable interest
property, and during the surviving
will not be treated as a nondeductible
if: (a) the surviving spouse is entitled for
spouse's lifetime no person has a power
terminable interest if:
life to all of the income from the entire
to appoint any part of the property to
1. The interest in the trust passes
interest; (b) the income is payable
any person other than the surviving
from the decedent to the surviving
annually or at more frequent intervals;
spouse. An annuity is treated as an
spouse, and
(c) the surviving spouse has the power,
income interest regardless of whether
exercisable in favor of the surviving
2. The surviving spouse is the only
the property from which the annuity is
spouse or the estate of the surviving
beneficiary of the trust other than
payable can be separately identified.
spouse, to appoint the entire interest;
charitable organizations described in
Regulations sections 20.2044-1 and
(d) the power is exercisable by the
section 170(c).
20.2056(b)-7(d)(3) state that an interest
surviving spouse alone and (whether
A charitable remainder trust is either
in property is eligible for QTIP treatment
exercisable by will or during life) is
a charitable remainder annuity trust or a
if the income interest is contingent upon
exercisable by the surviving spouse in
charitable remainder unitrust. (See
the executor's election even if that
all events; and (e) no part of the entire
section 664 for descriptions of these
portion of the property for which no
interest is subject to a power in any
trusts.)
election is made will pass to or for the
other person to appoint any part to any
benefit of beneficiaries other than the
person other than the surviving spouse
Election To Deduct Qualified
surviving spouse.
(or the surviving spouse's legal
Terminable Interests (QTIP)
representative or relative if the surviving
The QTIP election may be made for
You may elect to claim a marital
spouse is disabled. See Regulations
all or any part of qualified terminable
deduction for qualified terminable
section 20.2056(b)-5(a) and Rev. Rul.
interest property. A partial election must
interest property or property interests.
85-35, 1985-1 C.B. 328). If these five
relate to a fractional or percentile share
You make the QTIP election simply by
conditions are satisfied only for a
of the property so that the elective part
listing the qualified terminable interest
specific portion of the entire interest,
will reflect its proportionate share of the
property on Part A of Schedule M and
see Regulations sections
increase or decline in the whole of the
inserting its value. You are presumed to
20.2056(b)-5(b) and -5(c) to determine
property when applying section 2044 or
have made the QTIP election if you list
the amount of the marital deduction.
2519. Thus, if the interest of the
the property and insert its value on
surviving spouse in a trust (or other
Life insurance, endowment, or annu-
Schedule M. If you make this election,
property in which the spouse has a
ity payments, with power of appoint-
the surviving spouse's gross estate will
qualified life estate) is qualified
ment in surviving spouse. A property
include the value of the qualified
terminable interest property, you may
interest consisting of the entire
terminable interest property. See the
make an election for a part of the trust
proceeds under a life insurance,
instructions for Part 4—General
(or other property) only if the election
endowment, or annuity contract is
Information, line 7, for more details. The
relates to a defined fraction or
treated as passing from the decedent to
election is irrevocable.
percentage of the entire trust (or other
the surviving spouse, and will not be
property). The fraction or percentage
If you file a Form 706 in which you do
treated as a nondeductible terminable
may be defined by means of a formula.
not make this election, you may not file
interest if: (a) the surviving spouse is
an amended return to make the election
entitled to receive the proceeds in
-36-
Part Instructions
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