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example, a power to amend only

and that the property is not otherwise

If the decedent retired before

administrative provisions of a trust that

includible in the gross estate.

January 1, 1985, see Annuities Under

cannot substantially affect the beneficial

Approved Plans on page 18 for rules

Schedule I—Annuities

enjoyment of the trust property or

that allow the exclusion of part or all of

income is not a power of appointment.

certain annuities.

You must complete Schedule l and file

A power to manage, invest, or control

it with the return if you answered “Yes”

Part Includible

assets, or to allocate receipts and

to question 15 of Part 4 — General

disbursements, when exercised only in

If the decedent contributed only part of

Information.

a fiduciary capacity, is not a power of

the purchase price of the contract or

Enter on Schedule I every annuity

appointment.

agreement, include in the gross estate

that meets all of the conditions under

only that part of the value of the annuity

General power of appointment. A

General, below, and every annuity

receivable by the surviving beneficiary

general power of appointment is a

described in paragraphs (a) through (h)

that the decedent’s contribution to the

power that is exercisable in favor of the

of Annuities Under Approved Plans on

purchase price of the annuity or

decedent, the decedent’s estate, the

page 18, even if the annuities are

agreement bears to the total purchase

decedent’s creditors, or the creditors of

wholly or partially excluded from the

price.

the decedent’s estate, except:

gross estate.

1. A power to consume, invade, or

For example, if the value of the

For a discussion regarding the QTIP

appropriate property for the benefit of

survivor’s annuity was $20,000 and the

treatment of certain joint and survivor

the decedent that is limited by an

decedent had contributed three-fourths

annuities, see the Form 706 itself,

ascertainable standard relating to

of the purchase price of the contract,

Schedule M, line 3 instructions.

health, education, support, or

the amount includible is $15,000 (

maintenance of the decedent.

General

$20,000).

2. A power exercisable by the

In general, you must include in the

Except as provided under Annuities

decedent only in conjunction with:

gross estate all or part of the value of

Under Approved Plans on page 18,

a. the creator of the power or

any annuity that meets the following

contributions made by the decedent’s

b. a person who has a substantial

requirements:

employer to the purchase price of the

•

interest in the property subject to the

It is receivable by a beneficiary

contract or agreement are considered

power, which is adverse to the exercise

following the death of the decedent and

made by the decedent if they were

of the power in favor of the decedent.

by reason of surviving the decedent;

made by the employer because of the

•

The annuity is under a contract or

decedent’s employment. For more

A part of a power is considered a

agreement entered into after March 3,

information, see section 2039.

general power of appointment if the

1931;

power:

•

The annuity was payable to the

Definitions

1. May only be exercised by the

decedent (or the decedent possessed

Annuity. The term “annuity” includes

decedent in conjunction with another

the right to receive the annuity) either

one or more payments extending over

person and

alone or in conjunction with another, for

any period of time. The payments may

2. Is also exercisable in favor of the

the decedent’s life or for any period not

be equal or unequal, conditional or

other person (in addition to being

ascertainable without reference to the

unconditional, periodic or sporadic.

exercisable in favor of the decedent,

decedent’s death or for any period that

the decedent’s creditors, the decedent’s

did not in fact end before the

Examples. The following are

estate, or the creditors of the

decedent’s death; and

examples of contracts (but not

•

decedent’s estate).

The contract or agreement is not a

necessarily the only forms of contracts)

policy of insurance on the life of the

for annuities that must be included in

The part to include in the gross

decedent.

the gross estate.

estate as a general power of

These rules apply to all types of

1. A contract under which the

appointment is figured by dividing the

annuities, including pension plans,

decedent immediately before death was

value of the property by the number of

individual retirement arrangements,

receiving or was entitled to receive, for

persons (including the decedent) in

purchased commercial annuities, and

the duration of life, an annuity with

favor of whom the power is exercisable.

private annuities.

payments to continue after death to a

Date power was created. Generally,

designated beneficiary, if surviving the

Note. A private annuity is an annuity

a power of appointment created by will

decedent.

issued from a party not engaged in the

is considered created on the date of the

2. A contract under which the

business of writing annuity contracts,

testator’s death.

decedent immediately before death was

typically a junior generation family

A power of appointment created by

receiving or was entitled to receive,

member or a family trust.

an inter vivos instrument is considered

together with another person, an

An annuity contract that provides

created on the date the instrument

annuity payable to the decedent and

periodic payments to a person for life

takes effect. If the holder of a power

the other person for their joint lives,

and ceases at the person’s death is not

exercises it by creating a second

with payments to continue to the

includible in the gross estate. Social

power, the second power is considered

survivor following the death of either.

Security benefits are not includible in

as created at the time of the exercise of

3. A contract or agreement entered

the gross estate even if the surviving

the first.

into by the decedent and employer

spouse receives benefits.

under which the decedent immediately

Attachments

An annuity or other payment that is

before death and following retirement

If the decedent ever possessed a

not includible in the decedent’s or the

was receiving, or was entitled to

power of appointment, attach a certified

survivor’s gross estate as an annuity

receive, an annuity payable to the

or verified copy of the instrument

may still be includible under some other

decedent for life and after the

granting the power and a certified or

applicable provision of the law. For

decedent’s death to a designated

verified copy of any instrument by

example, see Powers of Appointment

beneficiary, if surviving the decedent,

which the power was exercised or

on page 16 and the Instructions for

whether the payments after the

released. You must file these copies

Schedule G — Transfers During

decedent’s death are fixed by the

even if you contend that the power was

Decedent’s Life on page 15. See also

contract or subject to an option or

not a general power of appointment,

Regulations section 20.2039-1(e).

election exercised or exercisable by the

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Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 17

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