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appointment in surviving spouse. A If you file a Form 706 in which you qualified terminable interest property do not make this election, you may not under section 2056(b)(7), and property interest consisting of the entire file an amended return to make the proceeds under a life insurance, a. The trust or other property is listed election unless you file the amended endowment, or annuity contract is on Schedule M and return on or before the due date for treated as passing from the decedent to b. The value of the trust (or other filing the original Form 706. the surviving spouse, and will not be property) is entered in whole or in part treated as a nondeductible terminable The effect of the election is that the as a deduction on Schedule M, interest if: (a) the surviving spouse is property (interest) will be treated as entitled to receive the proceeds in passing to the surviving spouse and will then unless the executor specifically installments, or is entitled to interest on not be treated as a nondeductible identifies the trust (all or a fractional them, with all amounts payable during terminable interest. All of the other portion or percentage) or other property the life of the spouse, payable only to marital deduction requirements must to be excluded from the election, the the surviving spouse; (b) the installment still be satisfied before you may make executor shall be deemed to have or interest payments are payable this election. For example, you may not made an election to have such trust (or annually, or more frequently, beginning make this election for property or other property) treated as qualified not later than 13 months after the property interests that are not included terminable interest property under decedent’s death; (c) the surviving in the decedent’s gross estate. section 2056(b)(7). spouse has the power, exercisable in Qualified terminable interest If less than the entire value of the favor of the surviving spouse or of the property. Qualified terminable interest trust (or other property) that the estate of the surviving spouse, to property is property (a) that passes executor has included in the gross appoint all amounts payable under the from the decedent, and (b) in which the estate is entered as a deduction on contract; (d) the power is exercisable by surviving spouse has a qualifying Schedule M, the executor shall be the surviving spouse alone and income interest for life. considered to have made an election (whether exercisable by will or during only as to a fraction of the trust (or life) is exercisable by the surviving The surviving spouse has a other property). The numerator of this spouse in all events; and (e) no part of qualifying income interest for life if the fraction is equal to the amount of the the amount payable under the contract surviving spouse is entitled to all of the trust (or other property) deducted on is subject to a power in any other income from the property payable Schedule M. The denominator is equal person to appoint any part to any annually or at more frequent intervals, to the total value of the trust (or other person other than the surviving spouse. or has a usufruct interest for life in the property). If these five conditions are satisfied property, and during the surviving only for a specific portion of the spouse’s lifetime no person has a Qualified Domestic Trust proceeds, see the section 2056(b) power to appoint any part of the regulations to determine the amount of Election (QDOT) property to any person other than the the marital deduction. surviving spouse. An annuity is treated The marital deduction is allowed for as an income interest regardless of transfers to a surviving spouse who is Charitable remainder trusts. An whether the property from which the not a U.S. citizen only if the property interest in a charitable remainder trust annuity is payable can be separately passes to the surviving spouse in a will not be treated as a nondeductible identified. qualified domestic trust (QDOT) or if terminable interest if: such property is transferred or Amendments to Regulations 1. The interest in the trust passes irrevocably assigned to a QDOT before sections 20.2044-1, 20.2056(b)-7, and from the decedent to the surviving the decedent’s estate tax return is filed. 20.2056(b)-10 clarify that an interest in spouse, and property is eligible for QTIP treatment if A QDOT is any trust: 2. The surviving spouse is the only the income interest is contingent upon 1. That requires at least one trustee beneficiary of the trust other than the executor’s election even if that to be either an individual who is a charitable organizations described in portion of the property for which no citizen of the United States or a section 170(c). election is made will pass to or for the domestic corporation; benefit of beneficiaries other than the 2. That requires that no distribution A charitable remainder trust is either surviving spouse. of corpus from the trust can be made a charitable remainder annuity trust or a unless such a trustee has the right to The QTIP election may be made for charitable remainder unitrust. (See withhold from the distribution the tax all or any part of qualified terminable section 664 for descriptions of these imposed on the QDOT; interest property. A partial election must trusts.) 3. That meets the requirements of relate to a fractional or percentile share any applicable regulations; and of the property so that the elective part Election To Deduct Qualified 4. For which the executor has made will reflect its proportionate share of the an election on the estate tax return of increase or decline in the whole of the Terminable Interests (QTIP) the decedent. property when applying section 2044 or You may elect to claim a marital 2519. Thus, if the interest of the deduction for qualified terminable Note. For trusts created by an surviving spouse in a trust (or other interest property or property interests. instrument executed before November property in which the spouse has a You make the QTIP election simply by 5, 1990, paragraphs 1 and 2 above will qualified life estate) is qualified listing the qualified terminable interest be treated as met if the trust instrument terminable interest property, you may property on Schedule M and inserting requires that all trustees be individuals make an election for a part of the trust its value. You are presumed to have who are citizens of the United States or (or other property) only if the election made the QTIP election if you list the domestic corporations. relates to a defined fraction or property and insert its value on percentage of the entire trust (or other Schedule M. If you make this election, You make the QDOT election simply property). The fraction or percentage the surviving spouse’s gross estate will by listing the qualified domestic trust or may be defined by means of a formula. include the value of the qualified the entire value of the trust property on terminable interest property. See the Election to Deduct Qualified Schedule M and deducting its value. instructions for Part 4—General Terminable Interest Property Under You are presumed to have made the Information, line 6, for more details. Section 2056(b)(7). If a trust (or other QDOT election if you list the trust or The election is irrevocable. property) meets the requirements of trust property and insert its value on -29- Part Instructions