IRS Form 712 – In the complex world of estate and gift tax planning, understanding IRS Form 712, also known as the Life Insurance Statement, is essential for executors, estate planners, and anyone dealing with life insurance policies in taxable estates. This form plays a critical role in reporting the value of life insurance proceeds or premiums to the IRS, ensuring compliance with federal tax laws. Whether you’re filing an estate tax return or reporting a policy transfer as a gift, this comprehensive guide will walk you through everything you need to know about IRS Form 712, including its purpose, filing requirements, and step-by-step instructions.
What Is IRS Form 712?
IRS Form 712 is an official document used to provide a detailed statement about a life insurance policy’s value. It is typically prepared by the insurance company and submitted by the executor or donor to the IRS. The form captures key details such as the policy’s face amount, accumulated dividends, outstanding loans, and net proceeds, which are crucial for determining estate or gift tax liabilities. Unlike standard tax forms, Form 712 is not filed independently but as an attachment to other IRS returns, such as Form 706 (United States Estate Tax Return) or Form 709 (United States Gift Tax Return).
The latest revision of Form 712 is dated December 2024, and it includes updates to reflect current tax regulations. As of 2026, there are no major recent developments reported by the IRS, but always check the official IRS website for any changes.
Purpose of IRS Form 712
The primary purpose of IRS Form 712 is to report the fair market value of life insurance policies for tax purposes. This helps the IRS calculate potential estate taxes on proceeds received after a policyholder’s death or gift taxes on policy transfers during their lifetime. For estate taxes, it ensures that life insurance benefits are properly included (or excluded) from the decedent’s taxable estate. In gift scenarios, it establishes the policy’s value at the time of transfer, which could trigger gift tax obligations if the value exceeds annual exclusion limits.
Key scenarios where Form 712 is used include:
- Valuing policies owned by the decedent at death.
- Reporting transfers of policies to trusts or beneficiaries to minimize estate taxes.
- Documenting policies where the decedent had “incidents of ownership,” even if not directly owned.
By providing this statement, the form helps avoid disputes over policy valuations and supports accurate tax reporting.
Who Needs to File IRS Form 712?
Form 712 is typically filed by:
- Executors of estates: When submitting Form 706 (for U.S. citizens or residents) or Form 706-NA (for nonresidents).
- Donors or gift givers: When filing Form 709 (U.S. Gift Tax Return) or Form 709-NA for policy transfers.
The insurance company prepares and certifies the form, but it’s the executor’s or donor’s responsibility to include it with their tax return. If you’re an estate planner or beneficiary, you may request Form 712 from the insurer after a claim is processed. Note that a separate Form 712 must be filed for each life insurance policy involved.
When to File IRS Form 712?
Form 712 should be filed whenever life insurance is part of an estate or gift tax return. Specific timing includes:
- For estates: Attach to Form 706 or 706-NA, due 9 months after the date of death (extensions possible).
- For gifts: Include with Form 709, due by April 15 of the year following the gift (or October 15 with extension).
It’s also required if the policy was transferred within 3 years of the decedent’s death, as this could affect includability in the estate. Always file if the estate’s gross value exceeds the federal estate tax exemption (adjusted annually; check IRS guidelines for 2026 thresholds).
How to Fill Out IRS Form 712: Step-by-Step?
Filling out Form 712 requires information from the insurance company. The form is divided into two main parts: Part I for decedents and Part II for living insureds (gifts).
Part I: Decedent—Insured (For Estate Tax Returns)
This section is for policies where the insured has passed away. Key fields include:
- Lines 1-4: Decedent’s personal details (name, SSN, date of death).
- Lines 5-7: Insurance company and policy info (name, address, type, number).
- Lines 8-14: Ownership, issuance, assignment, premiums, and beneficiaries.
- Lines 15-25: Financial details like face amount, benefits, indebtedness, dividends, and proceeds value.
- Lines 26-30: Installment provisions, including mortality tables and interest rates.
- Lines 31-35: Questions on transfers, annuities, ownership incidents, and other policies.
The insurer certifies the accuracy at the bottom.
Part II: Living Insured (For Gift Tax Returns)
Used when transferring a policy as a gift or if the decedent owned insurance on another’s life.
- Section A (Lines 36-40): Donor or decedent details and valuation date.
- Section B (Lines 41-57): Insured’s info, policy details, premiums, assignees, and beneficiaries.
- Lines 58-59: Valuation calculations for non-paid-up or paid-up policies, including reserves, adjustments, and net value.
Again, the insurer signs and dates the certification.
| Section | Key Focus | Required Attachments |
|---|---|---|
| Part I | Decedent details and policy proceeds | Copy of application/assignment if applicable |
| Part II | Gift valuation and living insured info | Extra sheets for complex beneficiary designations |
Tips for Accuracy:
- Report annual premiums on Line 13, not cumulative.
- Attach policy copies if non-lump-sum settlements apply.
- Use the interpolated terminal reserve for valuations in gift scenarios.
Common Mistakes to Avoid When Filing Form 712
- Incomplete Information: Ensure all fields are filled; missing data can delay processing.
- Incorrect Valuation Date: Use the date of death for estates or gift date for transfers.
- Forgetting Separate Forms: One per policy—don’t combine.
- Ignoring Transfers: Disclose any within 3 years to avoid audits.
Consult a tax professional if the estate involves complex trusts or international elements.
Where to Download and Get Help with IRS Form 712?
You can download the latest IRS Form 712 PDF directly from the official IRS website at https://www.irs.gov/pub/irs-pdf/f712.pdf. For instructions, visit the “About Form 712” page on IRS.gov. If you need a completed form for a specific policy, contact your insurance provider—they are responsible for preparing it upon request.
For additional guidance, refer to IRS publications or consult a certified public accountant (CPA) specializing in estate taxes.
Conclusion
Navigating IRS Form 712 doesn’t have to be overwhelming. By understanding its role in estate and gift tax reporting, you can ensure smooth compliance and potentially minimize tax burdens through proper planning, such as transferring policies to irrevocable trusts. Always use the most current version and trusted sources to stay updated. If you’re dealing with a large estate or multiple policies, professional advice is invaluable to avoid costly errors.