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beneficiaries. Expenses incurred on

are included in the gross estate.

6. Any property interest disclaimed

behalf of the transferees (except those

However, you should not list any

by the surviving spouse.

described above) are not deductible.

nondeductible terminable interests

Examples of deductible and

(described below) on Schedule M

Terminable Interests

nondeductible expenses are provided in

unless you are making a QTIP election.

Certain interests in property passing

Regulations section 20.2053-8(d).

The property for which you make this

from a decedent to a surviving spouse

election must be included on Schedule

List the names and addresses of the

are referred to as terminable interests.

M. See Qualified terminable interest

persons to whom each expense was

These are interests that will terminate

property, below.

payable and the nature of the expense.

or fail after the passage of time, or on

Identify the property for which the

For the rules on common disaster

the occurrence or nonoccurrence of a

expense was incurred by indicating the

designated event. Examples are: life

and survival for a limited period, see

schedule and item number where the

estates, annuities, estates for terms of

section 2056(b)(3).

property is included in the gross estate.

years, and patents.

If you do not know the exact amount of

You may list on Schedule M only

The ownership of a bond, note, or

the expense, you may deduct an

those interests that the surviving

other contractual obligation, which

estimate, provided that the amount may

spouse takes:

when discharged would not have the

be verified with reasonable certainty

1. As the decedent’s legatee,

effect of an annuity for life or for a term,

and will be paid before the period of

devisee, heir, or donee;

is not considered a terminable interest.

limitations for assessment (referred to

2. As the decedent’s surviving

above) expires. Keep all vouchers and

Nondeductible terminable interests.

tenant by the entirety or joint tenant;

receipts for inspection by the IRS.

A terminable interest is nondeductible.

3. As an appointee under the

Unless you are making a QTIP election,

decedent’s exercise of a power or as a

Schedule M—Bequests,

a terminable interest should not be

taker in default at the decedent’s

entered on Schedule M if:

etc., to Surviving Spouse

nonexercise of a power;

1. Another interest in the same

4. As a beneficiary of insurance on

(Marital Deduction)

the decedent’s life;

property passed from the decedent to

some other person for less than

5. As the surviving spouse taking

General

adequate and full consideration in

under dower or curtesy (or similar

money or money’s worth; and

statutory interest); and

You must complete Schedule M and file

2. By reason of its passing, the

6. As a transferee of a transfer

it with the return if you claim a

other person or that person’s heirs may

made by the decedent at any time.

deduction on Part 5 — Recapitulation,

enjoy part of the property after the

item 20.

termination of the surviving spouse’s

The marital deduction is authorized

interest.

Property Interests That You

by section 2056 for certain property

May Not List on Schedule M

interests that pass from the decedent to

This rule applies even though the

the surviving spouse. You may claim

You should not list on Schedule M:

interest that passes from the decedent

the deduction only for property interests

to a person other than the surviving

1. The value of any property that

that are included in the decedent’s

spouse is not included in the gross

does not pass from the decedent to the

gross estate (Schedules A through I).

estate, and regardless of when the

surviving spouse;

Note. The marital deduction is

interest passes. The rule also applies

2. Property interests that are not

generally not allowed if the surviving

regardless of whether the surviving

included in the decedent’s gross estate;

spouse is not a U.S. citizen. The marital

spouse’s interest and the other

3. The full value of a property

deduction is allowed for property

person’s interest pass from the

interest for which a deduction was

passing to such a surviving spouse in a

decedent at the same time.

claimed on Schedules J through L. The

qualified domestic trust (QDOT) or if

value of the property interest should be

Property interests that are

such property is transferred or

reduced by the deductions claimed with

considered to pass to a person other

irrevocably assigned to such a trust

respect to it;

than the surviving spouse are any

before the estate tax return is filed. The

4. The full value of a property

property interest that: (a) passes under

executor must elect QDOT status on

interest that passes to the surviving

a decedent’s will or intestacy; (b) was

the return. See the instructions that

spouse subject to a mortgage or other

transferred by a decedent during life; or

follow for details on the election.

encumbrance or an obligation of the

surviving spouse. Include on Schedule

person as a decedent’s joint tenant, as

Property Interests That You

M only the net value of the interest after

appointee under a decedent’s exercise

May List on Schedule M

reducing it by the amount of the

of a power, as taker in default at a

Generally, you may list on Schedule M

mortgage or other debt;

decedent’s release or nonexercise of a

all property interests that pass from the

5. Nondeductible terminable

power, or as a beneficiary of insurance

decedent to the surviving spouse and

interests (described below); or

on the decedent’s life.

Examples of Listing of Property Interests on Schedule M

Item

Description of property interests passing to surviving spouse.

Amount

number

For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN.

All other property:

One-half the value of a house and lot, 256 South West Street, held by decedent and surviving spouse as

joint tenants with right of survivorship under deed dated July 15, 1975 (Schedule E, Part I, item 1) . . . . . .

$182,500

Proceeds of Metropolitan Life Insurance Company policy No. 104729, payable in one sum to surviving

spouse (Schedule D, item 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200,000

Cash bequest under Paragraph Six of will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100,000

-27-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 27

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