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1. The value of the property transferred

in the applicable fraction is the gift tax

The denominator of the new fraction is

to the trust, minus

value for an inter vivos transfer as long as

the sum of:

the allocation of the $1 million exemption

2. The sum of:

1. The value of the current transfer

was made on a timely filed gift tax return.

(minus any Federal estate tax or state

a. Any Federal estate tax or state death

The value of a testamentary transfer is

death tax actually paid by the trust

tax actually recovered from the trust

generally the estate tax value.

attributable to such property) and any

attributable to the property, and

If the allocation of the exemption to an

charitable deduction allowed with respect

b. Any charitable deduction allowed

inter vivos transfer is not made on a timely

to such property, and

under section 2055 or 2522 with respect to

filed gift tax return, the value for purposes

2. The value of all property in the trust

the property.

of the applicable fraction is the value of

immediately before the current transfer.

Round the applicable fraction to the

the property transferred at the time the

Charitable lead annuity trusts.—For

nearest one-thousandth (.001).

allocation is filed with the IRS.

distributions from a charitable lead annuity

Numerator (GST exemption).—Every

For qualified terminable interest property

trust after October 13, 1987, the numerator

individual settlor is allowed a lifetime GST

(QTIP) that is included in the estate of the

of the applicable fraction is the adjusted

exemption of $1 million against property

surviving spouse of the settlor because of

GST exemption as defined below. The

that the individual has transferred. Once

section 2044, unless a special QTIP

denominator is the value of the trust

made, allocations are irrevocable.

election has been made under section

immediately after termination of the

2652(a)(3), the surviving spouse is

Allocation of the GST exemption is made

charitable lead annuity.

considered the transferor under section

by the settlor on Form 709, United States

The adjusted GST exemption is the sum

2652(a) for GST purposes, and the value is

Gift (and Generation-Skipping Transfer) Tax

of:

the estate tax value in the estate of the

Return, and/or Form 706, United States

1. The exemption allocated to the trust,

surviving spouse.

Estate (and Generation-Skipping Transfer)

and

Tax Return, by the executor of the settlor’s

A special QTIP election allows property

estate. Therefore, you should obtain

2. Interest on the exemption determined

for which a QTIP election was made for

at the interest rate used to figure the

information regarding the allocation of the

estate or gift tax purposes to be treated for

exemption to this trust from the settlor or

estate or gift deduction for the charitable

GST tax purposes as if this QTIP election

lead annuity and for the actual period of

the executor of the settlor’s estate, as

had not been made. If the special QTIP

applicable.

the charitable lead annuity.

election has been made, the predeceased

settlor spouse is the transferor and the

If the settlor’s entire $1 million

In the case of a late allocation, the

value is that spouse’s estate or gift tax

exemption is not allocated by the due date

amount of interest accrued prior to the

value under the rules described above. The

(including extensions) of the settlor’s estate

date of allocation is zero.

executor of the settlor spouse’s estate or

tax return, the exemption is automatically

Column e. Value

the settlor spouse must make the special

allocated to all of the settlor’s

QTIP election.

generation-skipping transfers. For details,

Enter the value of the property distributed

see section 2632(c).

If an individual could not make a timely

from the trust at the time of distribution.

allocation of exemption because of an

Transfers subject to an “estate tax

ETIP, the value of the property for the

inclusion period.”—If a transferor made

Part III. Trust Information

purpose of computing the inclusion ratio is

an inter vivos transfer, and the property

the estate tax value if the property is

transferred would have been includible in

Line 4

includible in the transferor’s gross estate. If

the transferor’s estate if he or she had died

the property is not includible in the

An arrangement that has substantially the

immediately after the transfer (other than

transferor’s gross estate, the property is

same effect as a trust will be treated as a

by reason of the transferor dying within 3

valued at the close of the ETIP, provided

trust even though it is not an explicit trust.

years of making the gift), for purposes of

that the GST exemption is allocated on a

Examples of such arrangements are

determining the inclusion ratio, the GST

insurance and annuity contracts,

timely filed gift tax return for the calendar

exemption cannot be allocated until the

year in which the ETIP closes.

arrangements involving life estates and

close of the estate tax inclusion period

remainders, and estates for years.

(ETIP).

Multiple transfers into a trust.—When a

Nonexplicit trusts do not include

transfer is made to a pre-existing trust, the

The value of the property for the

decedent’s estates.

applicable fraction must be recomputed.

purpose of figuring the inclusion ratio is the

The numerator of the new fraction is the

In the case of a nonexplicit trust, the

estate tax value if the property is included

sum of:

trustee is the person in actual or

in the transferor’s gross estate, or its value

constructive possession of the property

at the close of the ETIP.

1. The exemption allocated to the

involved.

current transfer, and

The ETIP closes at the earliest of:

2. The nontax portion of the trust

Line 5

1. The time the transferred property

immediately before the current transfer (the

would no longer be includible in the

Whenever property is transferred into a

product of the applicable fraction and the

settlor’s estate,

pre-existing trust, the inclusion ratio must

value of all of the property in the trust

2. The date of a generation-skipping

be refigured. See Multiple transfers into a

immediately before the current transfer).

transfer of the property, or

trust above for the rule on how to refigure

3. The date of death of the settlor.

the inclusion ratio.

Denominator (valuation of trust

assets).—In general, the value to be used

Page 4

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Instructions For Trustee For Form 706-Gs(D-1) - Notification Of Distribution From A Generation-Skipping Trust Page 4

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