When universal life entered the picture, the calculation of interpolated terminal reserve (ITR) provided on Form 712, Life Insurance Statement, became much more complicated.
The attorney involved contacted the insurance carrier informally by phone asking it to indicate what the ITR value would be if it ordered an IRS Form 712:
A Form 712
(Life Insurance Statement) is ordered from the carrier to determine the value of the policy for transfer tax purposes.
(6.) See Estate Tax Form 706, Schedule D, and Form 712
(5) Finally, note that the estate of a decedent who was insured under a life settled policy will have to identify the life settled policy and its assignor on Internal Revenue Service Form 712. Assuming the policy was in fact sold for fair market value, it should not be estate tax includable.
(7.) A copy of IRS Form 712 can be obtained at: http://www.irs.gov/pub/irs-pdf/f712.pdf.
Claim for life insurance benefits--obtain Form 712
from insurance company
The insurance company should provide the interpolated terminal reserve value as of the date the policy is transferred to the trust on Form 712, Life Insurance Statement, which CPAs should attach to the gift tax return.
The insurance company should provide the value in writing on form 712.
If an estate tax return will be filed, the executor/trustee should request Form 712
, Life Insurance Statement, which will be attached to the Form 706.
The best way to support the value of the life insurance policy usually is to request a Living Form 712
from the life insurance company as of the required valuation date.
This will be critical to filing a claim and requesting Form 712
from the insurance carrier for the preparation of an estate tax return should one need to be filed.