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of general circulation. In valuing listed

Interest rate.

possessed at death any of the following

stocks and bonds, you should carefully

incidents of ownership, exercisable

check accurate records to obtain values

For cash on hand, list such cash

either alone or in conjunction with any

for the applicable valuation date.

separately from bank deposits.

person or entity.

For cash in banks, savings and loan

Incidents of ownership in a policy

If you get quotations from brokers, or

include:

associations, and other types of

evidence of the sale of securities from

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financial organizations, list:

The right of the insured or estate to

the officers of the issuing companies,

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Name and address of each financial

its economic benefits;

attach to the schedule copies of the

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The power to change the beneficiary;

organization,

letters furnishing these quotations or

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Amount in each account,

The power to surrender or cancel the

evidence of sale.

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policy;

Serial or account number,

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Schedule C—Mortgages,

Nature of account — checking,

The power to assign the policy or to

savings, time deposit, etc., and

revoke an assignment;

Notes, and Cash

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The power to pledge the policy for a

Unpaid interest accrued from date of

last interest payment to the date of

loan;

Complete Schedule C and file it with

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death.

The power to obtain from the insurer

your return if the total gross estate

a loan against the surrender value of

contains any:

Note. If you obtain statements from

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the policy; and

Mortgages,

the financial organizations, keep them

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A reversionary interest if the value of

Notes, or

for IRS inspection.

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the reversionary interest was more than

Cash.

Schedule D—Insurance

5% of the value of the policy

List on Schedule C:

immediately before the decedent died.

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Mortgages and notes payable to the

on the Decedent’s Life

(An interest in an insurance policy is

decedent at the time of death.

considered a reversionary interest if, for

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If you are required to file Form 706 and

Cash the decedent had at the date of

example, the proceeds become

there was any insurance on the

death.

payable to the insured’s estate or

decedent’s life, whether or not included

Note. Do not list mortgages and notes

payable as the insured directs if the

in the gross estate, you must complete

payable by the decedent on Schedule

beneficiary dies before the insured.)

Schedule D and file it with the return.

C. (If these are deductible, list them on

Life insurance not includible in the

Insurance you must include on

Schedule K.)

gross estate under section 2042 may

Schedule D. Under section 2042, you

be includible under some other section

must include in the gross estate:

of the Code. For example, a life

List the items on Schedule C in the

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Insurance on the decedent’s life

following order:

insurance policy could be transferred by

receivable by or for the benefit of the

the decedent in such a way that it

1. Mortgages;

estate; and

would be includible in the gross estate

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2. Promissory notes;

Insurance on the decedent’s life

under section 2036, 2037, or 2038. See

3. Contracts by decedent to sell

receivable by beneficiaries other than

the instructions to Schedule G for a

land;

the estate, as described below.

description of these sections.

4. Cash in possession; and

The term “insurance” refers to life

5. Cash in banks, savings and loan

Completing the Schedule

insurance of every description,

associations, and other types of

including death benefits paid by

You must list every insurance policy on

financial organizations.

fraternal beneficiary societies operating

the life of the decedent, whether or not

under the lodge system, and death

it is included in the gross estate.

What to enter in the “Description”

benefits paid under no-fault automobile

column:

Under “Description,” list:

insurance policies if the no-fault insurer

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For mortgages, list:

The name of the insurance company,

was unconditionally bound to pay the

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Face value,

and

benefit in the event of the insured’s

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Unpaid balance,

The number of the policy.

death.

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Date of mortgage,

For every life insurance policy listed

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Insurance in favor of the estate.

Name of maker,

on the schedule, you must request a

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Include on Schedule D the full amount

Property mortgaged,

statement on Form 712, Life Insurance

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of the proceeds of insurance on the life

Date of maturity,

Statement, from the company that

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of the decedent receivable by the

Interest rate, and

issued the policy. Attach the Form 712

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executor or otherwise payable to or for

Interest date.

to the back of Schedule D.

the benefit of the estate. Insurance in

Example to enter in “Description”

If the policy proceeds are paid in one

favor of the estate includes insurance

column: “Bond and mortgage of

used to pay the estate tax, and any

sum, enter the net proceeds received

$50,000, unpaid balance: $17,000;

(from Form 712, line 24) in the value

other taxes, debts, or charges that are

dated: January 1, 1992; John Doe to

(and alternate value) columns of

enforceable against the estate. The

Richard Roe; premises: 22 Clinton

Schedule D. If the policy proceeds are

manner in which the policy is drawn is

Street, Newark, NJ; due: January 1,

not paid in one sum, enter the value of

immaterial as long as there is an

2012; interest payable at 10% a

the proceeds as of the date of the

obligation, legally binding on the

year — January 1 and July 1.”

decedent’s death (from Form 712, line

beneficiary, to use the proceeds to pay

For promissory notes, list in the

25).

taxes, debts, or charges. You must

same way as mortgages.

include the full amount even though the

If part or all of the policy proceeds

premiums or other consideration may

For contracts by the decedent to sell

are not included in the gross estate,

have been paid by a person other than

land, list:

you must explain why they were not

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the decedent.

Name of purchaser,

included.

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Insurance receivable by

Contract date,

Schedule E—Jointly

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beneficiaries other than the estate.

Property description,

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Sale price,

Include on Schedule D the proceeds of

Owned Property

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Initial payment,

all insurance on the life of the decedent

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Amounts of installment payment,

not receivable by, or for the benefit of,

If you are required to file Form 706, you

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Unpaid balance of principal, and

the decedent’s estate if the decedent

must complete Schedule E and file it

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Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 18

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