Instructions For Form 706 - 2016 Page 36
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54termination of the surviving spouse's
any of a group of assets, the value of
entitled to receive the proceeds in
interest.
the property interest is, for the entry on
installments, or is entitled to interest on
Schedule M, reduced by the value of
them, with all amounts payable during
This rule applies even though the
any asset or assets that, if passing from
the life of the spouse, payable only to
interest that passes from the decedent
the decedent to the surviving spouse,
the surviving spouse; (b) the installment
to a person other than the surviving
would be nondeductible terminable
or interest payments are payable
spouse is not included in the gross
interests. Examples of property interests
annually, or more frequently, beginning
estate, and regardless of when the
that may be paid or otherwise satisfied
not later than 13 months after the
interest passes. The rule also applies
out of any of a group of assets are a
decedent's death; (c) the surviving
regardless of whether the surviving
bequest of the residue of the decedent's
spouse has the power, exercisable in
spouse's interest and the other person's
estate, or of a share of the residue, and
favor of the surviving spouse or of the
interest pass from the decedent at the
a cash legacy payable out of the general
estate of the surviving spouse, to
same time.
estate.
appoint all amounts payable under the
Property interests that are
contract; (d) the power of appointment
Example. A decedent bequeathed
considered to pass to a person other
is exercisable by the surviving spouse
$100,000 to the surviving spouse. The
than the surviving spouse are any
alone and (whether exercisable by will
general estate includes a term for years
property interest that: (a) passes under
or during life) is exercisable by the
(valued at $10,000 in determining the
a decedent's will or intestacy; (b) was
surviving spouse in all events; and (e)
value of the gross estate) in an office
transferred by a decedent during life; or
no part of the amount payable under the
building, which interest was retained by
(c) is held by or passed on to any
contract is subject to a power in any
the decedent under a deed of the
person as a decedent's joint tenant, as
other person to appoint any part to any
building by gift to a son. Accordingly,
appointee under a decedent's exercise
person other than the surviving spouse.
the value of the specific bequest
of a power, as taker in default at a
If these five conditions are satisfied only
entered on Schedule M is $90,000.
decedent's release or nonexercise of a
for a specific portion of the proceeds,
power, or as a beneficiary of insurance
Life estate with power of appoint-
see Regulations section
on the decedent's life. See Regulations
ment in the surviving spouse. A
20.2056(b)-6(b) to determine the
section 20.2056(c)-3.
property interest, whether or not in trust,
amount of the marital deduction.
will be treated as passing to the
For example, a decedent devised
Charitable remainder trusts. An
surviving spouse, and will not be treated
real property to his wife for life, with
interest in a charitable remainder trust
as a nondeductible terminable interest
remainder to his children. The life
will not be treated as a nondeductible
if: (a) the surviving spouse is entitled for
interest that passed to the wife does not
terminable interest if:
life to all of the income from the entire
qualify for the marital deduction
1. The interest in the trust passes
interest; (b) the income is payable
because it will terminate at her death
from the decedent to the surviving
annually or at more frequent intervals;
and the children will thereafter possess
spouse, and
(c) the surviving spouse has the power,
or enjoy the property.
exercisable in favor of the surviving
2. The surviving spouse is the only
However, if the decedent purchased
spouse or the estate of the surviving
beneficiary of the trust other than
a joint and survivor annuity for himself
spouse, to appoint the entire interest;
charitable organizations described in
and his wife who survived him, the value
(d) the power is exercisable by the
section 170(c).
of the survivor's annuity, to the extent
surviving spouse alone and (whether
that it is included in the gross estate,
A charitable remainder trust is either
exercisable by will or during life) is
qualifies for the marital deduction
a charitable remainder annuity trust or a
exercisable by the surviving spouse in
because even though the interest will
charitable remainder unitrust. (See
all events; and (e) no part of the entire
terminate on the wife's death, no one
section 664 for descriptions of these
interest is subject to a power in any
else will possess or enjoy any part of the
trusts.)
other person to appoint any part to any
property.
person other than the surviving spouse
Election To Deduct Qualified
The marital deduction is not allowed
(or the surviving spouse's legal
Terminable Interests (QTIP)
for an interest that the decedent
representative or relative if the surviving
directed the executor or a trustee to
You may elect to claim a marital
spouse is disabled. See Regulations
convert, after death, into a terminable
deduction for qualified terminable
section 20.2056(b)-5(a) and Rev. Rul.
interest property or property interests.
interest for the surviving spouse. The
85-35, 1985-1 C.B. 328). If these five
You make the QTIP election simply by
marital deduction is not allowed for such
conditions are satisfied only for a
listing the qualified terminable interest
an interest even if there was no interest
specific portion of the entire interest,
property on Part A of Schedule M and
in the property passing to another
see Regulations sections
inserting its value. You are presumed to
person and even if the terminable
20.2056(b)-5(b) and -5(c) to determine
have made the QTIP election if you list
interest would otherwise have been
the amount of the marital deduction.
the property and insert its value on
deductible under the exceptions
Life insurance, endowment, or annu-
Schedule M. If you make this election,
described later for life estates, life
ity payments, with power of appoint-
the surviving spouse's gross estate will
insurance, and annuity payments with
ment in surviving spouse. A property
include the value of the qualified
powers of appointment. For more
interest consisting of the entire
terminable interest property. See the
information, see Regulations sections
proceeds under a life insurance,
20.2056(b)-1(f) and 20.2056(b)-1(g),
instructions for Part 4—General
endowment, or annuity contract is
Example (7).
Information, line 7, for more details. The
treated as passing from the decedent to
election is irrevocable.
If any property interest passing from
the surviving spouse, and will not be
the decedent to the surviving spouse
If you file a Form 706 in which you do
treated as a nondeductible terminable
may be paid or otherwise satisfied out of
not make this election, you may not file
interest if: (a) the surviving spouse is
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Part Instructions
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