Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 37
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55will not be treated as a nondeductible
spouse's lifetime no person has a power
other property) deducted on
terminable interest if:
to appoint any part of the property to
Schedule M. The denominator is equal
any person other than the surviving
to the total value of the trust (or other
1. The interest in the trust passes
spouse. An annuity is treated as an
property).
from the decedent to the surviving
income interest regardless of whether
spouse, and
Qualified Domestic Trust
the property from which the annuity is
2. The surviving spouse is the only
Election (QDOT)
payable can be separately identified.
beneficiary of the trust other than
The marital deduction is allowed for
Regulations sections 20.2044-1 and
charitable organizations described in
transfers to a surviving spouse who is
20.2056(b)-7(d)(3) state that an interest
section 170(c).
not a U.S. citizen only if the property
in property is eligible for QTIP treatment
passes to the surviving spouse in a
A charitable remainder trust is either
if the income interest is contingent upon
QDOT or if such property is transferred
a charitable remainder annuity trust or a
the executor's election even if that
or irrevocably assigned to a QDOT
charitable remainder unitrust. See
portion of the property for which no
before the decedent's estate tax return
section 664 for descriptions of these
election is made will pass to or for the
is filed.
trusts.
benefit of beneficiaries other than the
surviving spouse.
Election To Deduct Qualified
A QDOT is any trust:
The QTIP election may be made for
Terminable Interests (QTIP)
1. That requires at least one trustee
all or any part of qualified terminable
You may elect to claim a marital
to be either a citizen of the United
interest property. A partial election must
deduction for qualified terminable
States or a domestic corporation,
relate to a fractional or percentile share
interest property or property interests.
2. That requires that no distribution
of the property so that the elective part
You make the QTIP election simply by
of corpus from the trust can be made
will reflect its proportionate share of the
listing the qualified terminable interest
unless such a trustee has the right to
increase or decline in the whole of the
property on Part A of Schedule M and
withhold from the distribution the tax
property when applying section 2044 or
inserting its value. You are presumed to
imposed on the QDOT,
2519. Thus, if the interest of the
have made the QTIP election if you list
surviving spouse in a trust (or other
3. That meets the requirements of
the property and insert its value on
property in which the spouse has a
any applicable regulations, and
Schedule M. If you make this election,
qualified life estate) is qualified
4. For which the executor has made
the surviving spouse's gross estate will
terminable interest property, you may
an election on the estate tax return of
include the value of the qualified
make an election for a part of the trust
the decedent.
terminable interest property. See the
(or other property) only if the election
instructions for Part 4—General
relates to a defined fraction or
Note. For trusts created by an
Information, line 7, for more details. The
percentage of the entire trust (or other
instrument executed before November
election is irrevocable.
property). The fraction or percentage
5, 1990, paragraphs 1 and 2 above will
may be defined by means of a formula.
If you file a Form 706 in which you do
be treated as met if the trust instrument
not make this election, you may not file
requires that all trustees be individuals
Election to deduct qualified termina-
an amended return to make the election
who are citizens of the United States or
ble interest property under section
unless you file the amended return on or
domestic corporations.
2056(b)(7). If a trust (or other property)
before the due date for filing the original
meets the requirements of qualified
You make the QDOT election simply
Form 706.
terminable interest property under
by listing the qualified domestic trust or
section 2056(b)(7), and
The effect of the election is that the
the entire value of the trust property on
property (interest) will be treated as
Schedule M and deducting its value.
1. The trust or other property is
passing to the surviving spouse and will
You are presumed to have made the
listed on Schedule M, and
not be treated as a nondeductible
QDOT election if you list the trust or
2. The value of the trust (or other
terminable interest. All of the other
trust property and insert its value on
property) is entered in whole or in part
marital deduction requirements must
Schedule M. Once made, the election
as a deduction on Schedule M,
still be satisfied before you may make
is irrevocable.
this election. For example, you may not
then unless the executor specifically
If an election is made to deduct
make this election for property or
identifies the trust (all or a fractional
qualified domestic trust property under
property interests that are not included
portion or percentage) or other property
section 2056A(d), provide the following
in the decedent's gross estate.
to be excluded from the election, the
information for each qualified domestic
executor shall be deemed to have made
trust on an attachment to this schedule.
Qualified terminable interest proper-
an election to have such trust (or other
ty. Qualified terminable interest
1. The name and address of every
property) treated as qualified terminable
property is property (a) that passes from
trustee,
interest property under section 2056(b)
the decedent, (b) in which the surviving
2. A description of each transfer
(7).
spouse has a qualifying income interest
passing from the decedent that is the
If less than the entire value of the
for life, and (c) for which election under
source of the property to be placed in
trust (or other property) that the
section 2056(b)(7) has been made.
trust, and
executor has included in the gross
The surviving spouse has a
3. The employer identification
estate is entered as a deduction on
qualifying income interest for life if the
number (EIN) for the trust.
Schedule M, the executor shall be
surviving spouse is entitled to all of the
considered to have made an election
income from the property payable
The election must be made for an
only as to a fraction of the trust (or other
annually or at more frequent intervals, or
entire QDOT trust. In listing a trust for
property). The numerator of this fraction
has a usufruct interest for life in the
which you are making a QDOT election,
is equal to the amount of the trust (or
property, and during the surviving
unless you specifically identify the
Part Instructions
-37-
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