Understanding Form 712 Life Insurance: A Comprehensive Guide

Life insurance can be an important tool to protect your loved ones financially in the event of your untimely death. But did you know that owning a life insurance policy can also have tax implications? That’s where Form 712 comes into play. In this article, we will explore what Form 712 is, when it’s needed, how to fill it out, and most importantly, how it can impact your taxes.

What is Form 712?

Form 712, also known as the Life Insurance Statement, is a document that provides information on the life insurance policies owned by the deceased or the decedent’s estate. It is used by the IRS to determine the value of the decedent’s estate and calculate the estate tax owed. The form is typically filed by the executor or administrator of the estate.

The main purpose of Form 712 is to provide a comprehensive list of all life insurance policies owned by the deceased. It includes information such as the name of the insurance company, policy number, face amount, and beneficiary information.

If the decedent owned any life insurance policies at the time of their death, the executor or administrator of the estate must file Form 712 with the estate tax return, Form 706. This is to ensure that the total value of the estate is accurately calculated, and any applicable estate tax is paid.

Who needs to file Form 712?

If the decedent owned life insurance policies at the time of their death, the executor or administrator of the estate is responsible for filing Form 712. The executor or administrator is typically named in the decedent’s will or appointed by the court if there is no will.

If the decedent did not own any life insurance policies, a Form 712 is not required.

When is Form 712 filed?

Form 712 is typically filed along with the estate tax return, Form 706. The estate tax return is due nine months after the date of death. However, the executor or administrator can request an extension of up to six months by filing Form 4768.

If the estate is not required to file an estate tax return due to the value of the estate falling below the exemption amount, a Form 712 is not required.

How to fill out Form 712?

Filling out Form 712 can be a complicated process, but with a little guidance, it can be done easily. Here, we have outlined the steps you need to follow:

Step 1: Gather Information

The first step is to gather all the necessary information that will be required to complete the form. This includes the name of the insurance company, policy number, face amount, and beneficiary information.

You will also need to provide the decedent’s name, date of birth, and date of death.

It’s important to make sure you have accurate and complete information to prevent any delays in processing the form.

Step 2: Determine the Ownership of the Policy

It’s important to determine the ownership of the policy as it can impact how the proceeds are taxed. If the decedent was the owner of the policy, the proceeds are included in the decedent’s estate and subject to estate tax. If the beneficiary is the owner of the policy, the proceeds are not subject to estate tax.

You will need to provide information on the ownership of each policy listed on the form.

Step 3: Complete the Form

Once you have all the necessary information, you can start completing the form. It’s important to be accurate and complete in filling out the form to prevent any delays or errors.

Make sure you provide all the required information and sign and date the form before submitting it.

Step 4: Submit the Form

Once the form is completed, it should be attached to the estate tax return, Form 706, and submitted to the IRS. The executor or administrator will be responsible for submitting the form and paying any applicable estate tax.

FAQ

Q: When is Form 712 required?

A: Form 712 is required if the decedent owned life insurance policies at the time of their death. It is typically filed along with the estate tax return, Form 706.

Q: Who is responsible for filing Form 712?

A: The executor or administrator of the estate is responsible for filing Form 712 if the decedent owned life insurance policies at the time of their death.

Q: What information is required to complete Form 712?

A: You will need to provide information such as the name of the insurance company, policy number, face amount, and beneficiary information. You will also need to provide the decedent’s name, date of birth, and date of death.

Q: How is ownership of the life insurance policy determined?

A: The ownership of the life insurance policy is determined by who paid the premiums. If the decedent paid the premiums, they are considered the owner. If the beneficiary paid the premiums, they are considered the owner.

Q: What happens if Form 712 is not filed?

A: If the executor or administrator fails to file Form 712, the IRS may assess penalties and interest on any estate tax owed. It’s important to file the form accurately and on time to avoid any unnecessary penalties.

Conclusion

Form 712 can seem like a daunting task, but with a little guidance, it can be completed easily. Remember to gather accurate and complete information, determine the ownership of the policy, and fill out the form accurately. Filing Form 712 along with the estate tax return can ensure that the total value of the estate is accurately calculated, and any applicable estate tax is paid.