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Any transfer within 3 years of

retained direct or indirect voting rights

Schedule G—Transfers

death of a retained section 2036 life

in a controlled corporation, the

During Decedent’s Life

estate, section 2037 reversionary

decedent is considered to have

interest, or section 2038 power to

retained enjoyment of the transferred

Complete Schedule G and file it with

revoke, etc., if the property subject to

property. A corporation is a controlled

the return if the decedent made any of

the life estate, interest, or power would

corporation if the decedent owned

the transfers described in (1) through

have been included in the gross estate

(actually or constructively) or had the

(5) beginning below through page 16,

had the decedent continued to possess

right (either alone or with any other

or if you answered “Yes” to question 11

the life estate, interest, or power until

person) to vote at least 20% of the total

or 12a of Part 4 — General Information.

death.

combined voting power of all classes of

Report the following types of

These transfers are reported on

stock. See section 2036(b). If these

transfers on this schedule.

Schedule G, regardless of whether a

voting rights ceased or were

gift tax return was required to be filed

relinquished within 3 years of the

IF. . .

AND . . .

THEN . . .

for them when they were made.

decedent’s death, the corporate

However, the amount includible and the

interests are included in the gross

the decedent

at the time of

for purposes of

information required to be shown for

made a transfer the transfer, the sections 2035

estate as if the decedent had actually

the transfers are determined:

from a trust,

transfer was

and 2038, treat

retained the voting rights until death.

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from a portion

the transfer as

For insurance on the life of the

The amount includible in the gross

of the trust that made directly

decedent using the instructions to

was owned by

by the

estate is the value of the transferred

Schedule D (attach Forms 712);

the grantor

decedent.

property at the time of the decedent’s

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For insurance on the life of

under section

death. If the decedent kept or reserved

676 (other than

another using the instructions to

an interest or right to only a part of the

by reason of

Schedule F (attach Forms 712); and

transferred property, the amount

section 672(e))

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For sections 2036, 2037, and

by reason of a

includible in the gross estate is a

2038 transfers, using paragraphs (3),

power in the

corresponding part of the entire value

grantor,

(4), and (5) of these instructions.

of the property.

Any such

3. Transfers with retained life

transfer within

A retained life estate does not have

estate (section 2036). These are

the annual gift

to be legally enforceable. What matters

transfers by the decedent in which the

tax exclusion is

is that a substantial economic benefit

decedent retained an interest in the

not includible in

was retained. For example, if a mother

the gross

transferred property. The transfer can

transferred title to her home to her

estate.

be in trust or otherwise, but excludes

daughter but with the informal

bona fide sales for adequate and full

understanding that she was to continue

consideration.

1. Certain gift taxes (section

living there until her death, the value of

2035(b)). Enter at item A of Schedule G

Interests or rights. Section 2036

the home would be includible in the

the total value of the gift taxes that

applies to the following retained

mother’s estate even if the agreement

were paid by the decedent or the estate

interests or rights:

would not have been legally

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on gifts made by the decedent or the

The right to income from the

enforceable.

decedent’s spouse within 3 years of

transferred property;

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4. Transfers taking effect at death

death.

The right to the possession or

(section 2037). A transfer that takes

The date of the gift, not the date of

enjoyment of the property; and

effect at the decedent’s death is one

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payment of the gift tax, determines

The right, either alone or with any

under which possession or enjoyment

whether a gift tax paid is included in the

person, to designate the persons who

can be obtained only by surviving the

gross estate under this rule. Therefore,

shall receive the income from, or

decedent. A transfer is not treated as

you should carefully examine the Forms

possess or enjoy, the property.

one that takes effect at the decedent’s

709 filed by the decedent and the

Retained annuity, unitrust, and

death unless the decedent retained a

decedent’s spouse to determine what

other income interests in trusts. If a

reversionary interest (defined below) in

part of the total gift taxes reported on

decedent transferred property into a

the property that immediately before the

them was attributable to gifts made

trust and retained or reserved the right

decedent’s death had a value of more

within 3 years of death.

to use such property, or the right to an

than 5% of the value of the transferred

For example, if the decedent died on

annuity, unitrust, or other interest in

property. If the transfer was made

July 10, 2008, you should examine gift

such trust with respect to the property

before October 8, 1949, the

tax returns for 2008, 2007, 2006, and

decedent so transferred for decedent’s

reversionary interest must have arisen

2005. However, the gift taxes on the

life, any period not ascertainable

by the express terms of the instrument

2005 return that are attributable to gifts

without reference to the decedent’s

of transfer.

made on or before July 10, 2005, are

death, or for a period that does not in

A reversionary interest is generally

not included in the gross estate.

fact end before the decedent’s death,

any right under which the transferred

then the decedent’s right to use the

Attach an explanation of how you

property or the retained annuity,

property will or may be returned to the

computed the includible gift taxes if you

unitrust, or other interest (whether

decedent or the decedent’s estate. It

do not include in the gross estate the

payable from income and/or principal)

also includes the possibility that the

entire gift taxes shown on any Form

constitutes the retention of the

transferred property may become

709 filed for gifts made within 3 years of

possession or enjoyment of, or the right

subject to a power of disposition by the

death. Also attach copies of any

to the income from, the property for

decedent. It does not matter if the right

pertinent gift tax returns filed by the

purposes of section 2036. See

arises by the express terms of the

decedent’s spouse for gifts made within

Regulations section 20.2036-1(c)(2).

instrument of transfer or by operation of

3 years of death.

law. For this purpose, reversionary

2. Other transfers within 3 years

Retained voting rights. Transfers

interest does not include the possibility

of death (section 2035(a)). These

with a retained life estate also include

the income alone from the property may

transfers include only the following:

transfers of stock in a controlled

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return to the decedent or become

Any transfer by the decedent with

corporation after June 22, 1976, if the

respect to a life insurance policy within

decedent retained or acquired voting

subject to the decedent’s power of

3 years of death; or

rights in the stock. If the decedent

disposition.

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Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 15

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