Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return (Page 29 of 41) in pdf

Form 706 (Rev. 8-93)

in the property passing to another

annuity contract is treated as passing

unless you file the amended return on or

person and even if the terminable

from the decedent to the surviving

before the due date for filing the original

interest would otherwise have been

spouse, and will not be treated as a

Form 706.

deductible under the exceptions

nondeductible terminable interest if: (a)

The effect of the election is that the

described below for life estate and life

the surviving spouse is entitled to

property (interest) will be treated as

insurance and annuity payments with

receive the proceeds in installments, or

passing to the surviving spouse and will

powers of appointment. For more

is entitled to interest on them, with all

not be treated as a nondeductible

information, see Regulations sections

amounts payable during the life of the

terminable interest. All of the other

20.2056(b)-1(f) and 20.2056(b)-1(g),

spouse, payable only to the surviving

marital deduction requirements must still

Example (7).

spouse; (b) the installment or interest

be satisfied before you may make this

payments are payable annually, or more

If any property interest passing from

election. For example, you may not

frequently, beginning not later than 13

the decedent to the surviving spouse

make this election for property or

months after the decedent’s death; (c)

may be paid or otherwise satisfied out of

property interests that are not included

the surviving spouse has the power,

any of a group of assets, the value of

in the decedent’s gross estate.

exercisable in favor of the surviving

the property interest is, for the entry on

Qualified Terminable Interest Property

spouse or of the estate of the surviving

Schedule M, reduced by the value of

is property (a) that passes from the

spouse, to appoint all amounts payable

any asset or assets that, if passing from

decedent, and (b) in which the surviving

under the contract; (d) the power is

the decedent to the surviving spouse,

spouse has a qualifying income interest

exercisable by the surviving spouse

would be nondeductible terminable

for life.

alone and (whether exercisable by will or

interests. Examples of property interests

The surviving spouse has a qualifying

during life) is exercisable by the

that may be paid or otherwise satisfied

income interest for life if the surviving

surviving spouse in all events; and (e) no

out of any of a group of assets are a

spouse is entitled to all of the income

part of the amount payable under the

bequest of the residue of the decedent’s

from the property payable annually or at

contract is subject to a power in any

estate, or of a share of the residue, and

more frequent intervals, or has a

other person to appoint any part to any

a cash legacy payable out of the general

usufruct interest for life in the property,

person other than the surviving spouse.

estate.

and during the surviving spouse’s

If these five conditions are satisfied only

Example: A decedent bequeathed

lifetime no person has a power to

for a specific portion of the proceeds,

$100,000 to the surviving spouse. The

appoint any part of the property to any

see the section 2056(b) regulations to

general estate includes a term for years

person other than the surviving spouse.

determine the amount of the marital

(valued at $10,000 in determining the

An annuity is treated as an income

deduction.

value of the gross estate) in an office

interest regardless of whether the

Charitable Remainder Trusts.—An

building, which interest was retained by

property from which the annuity is

interest in a charitable remainder trust

the decedent under a deed of the

payable can be separately identified.

will not be treated as a nondeductible

building by gift to a son. Accordingly, the

The QTIP election may be made for all

terminable interest if:

value of the specific bequest entered on

or any part of a qualified terminable

Schedule M is $90,000.

1. The interest in the trust passes from

interest property. A partial election must

the decedent to the surviving spouse;

Life Estate With Power of

relate to a fractional or percentile share

and

Appointment in the Surviving

of the property so that the elective part

Spouse.—A property interest, whether

2. The surviving spouse is the only

will reflect its proportionate share of the

or not in trust, will be treated as passing

beneficiary of the trust other than

increase or decline in the whole of the

to the surviving spouse, and will not be

charitable organizations described in

property when applying sections 2044 or

treated as a nondeductible terminable

section 170(c).

2519. Thus, if the interest of the

interest if: (a) the surviving spouse is

A “charitable remainder trust” is either

surviving spouse in a trust (or other

entitled for life to all of the income from

a charitable remainder annuity trust or a

property in which the spouse has a

the entire interest; (b) the income is

charitable remainder unitrust. (See

qualified life estate) is qualified

payable annually or at more frequent

section 664 for descriptions of these

terminable interest property, you may

intervals; (c) the surviving spouse has

trusts.)

make an election for a part of the trust

the power, exercisable in favor of the

(or other property) only if the election

Election To Deduct Qualified

surviving spouse or the estate of the

relates to a defined fraction or

Terminable Interests (QTIP)

surviving spouse, to appoint the entire

percentage of the entire trust (or other

interest; (d) the power is exercisable by

property). The fraction or percentage

You may elect to claim a marital

the surviving spouse alone and (whether

may be defined by means of a formula.

deduction for qualified terminable

exercisable by will or during life) is

interest property or property interests.

Qualified Domestic Trust Election

exercisable by the surviving spouse in all

You make the QTIP election simply by

(QDOT)

events; and (e) no part of the entire

listing the qualified terminable interest

interest is subject to a power in any

property on Schedule M and deducting

The marital deduction is allowed for

other person to appoint any part to any

its value. You are presumed to have

transfers to a surviving spouse who is

person other than the surviving spouse

made the QTIP election if you list the

not a U.S. citizen only if the property

(or the surviving spouse’s legal

property and deduct its value on

passes to the surviving spouse in a

representative or relative if the surviving

Schedule M. If you make this election,

“qualified domestic trust” (QDOT) or if

spouse is disabled. See Rev. Rul. 85-35

the surviving spouse’s gross estate will

such property is transferred or

1985-1 C.B. 328). If these five conditions

include the value of the “qualified

irrevocably assigned to a QDOT before

are satisfied only for a specific portion of

terminable interest property.” See the

the decedent’s estate tax return is filed.

the entire interest, see the section

instructions for line 6 of General

A QDOT is any trust:

2056(b) regulations to determine the

Information for more details. The

1. That requires at least one trustee to

amount of the marital deduction.

election is irrevocable.

be either an individual who is a citizen of

Life Insurance, Endowment, or Annuity

If you file a Form 706 in which you do

the United States or a domestic

Payments, With Power of Appointment

not make this election, you may not file

corporation;

in Surviving Spouse.—A property

an amended return to make the election

interest consisting of the entire proceeds

under a life insurance, endowment, or

Page 29

Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 29

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