This AIM Financial tax-form guide explains IRS Form 712 — Life Insurance Statement. The IRS’s current listed version is revised December 2024. This form helps an insurance company provide policy information used in certain federal estate tax matters, including when an executor prepares Form 706 or Form 706-NA. It is not an ordinary individual income tax return.

From AIM Financial | Tax Preparation Education for Grand Rapids and West Michigan

Life insurance can provide financial security for loved ones, but a policy may also create important federal estate and gift tax reporting questions. When someone dies, transfers ownership of a life insurance policy, or changes certain beneficiary arrangements, the value of the policy may need to be documented for tax purposes.

IRS Form 712, Life Insurance Statement, is used to provide information about a life insurance policy and its value. The form is generally prepared and certified by the insurance company, not independently completed by the policyholder or beneficiary. It can support estate tax returns and certain gift tax filings. <Cite refs={[“turn204637view0″,”turn204637view1”]}/>

What Is IRS Form 712?

Form 712 is an official IRS document that reports details about a life insurance policy. It can help establish the policy’s value at a particular date for federal estate or gift tax purposes.

The IRS form has two main sections:

• Part I — Decedent—Insured: Used in certain estate tax situations involving a deceased person’s life insurance policy.
• Part II — Living Insured: Used to provide valuation information for certain gifts involving life insurance when the insured person is still living. It may also be relevant in specified estate tax situations involving insurance on another person’s life.

The appropriate section depends on the transaction and the tax return being prepared. <Cite refs={[“turn204637view0″,”turn475660search12”]}/>

When Might Form 712 Be Required?

Form 712 may be requested when an executor, tax preparer, or other authorized representative needs insurance information to prepare an estate or gift tax return.

Common situations include:

1. Preparing a federal estate tax return. When a person dies, the executor may need to determine whether life insurance proceeds or policy ownership rights must be considered in calculating the taxable estate. Form 712 can provide the information needed to evaluate the policy.

2. Reporting a gift involving life insurance. Transferring ownership of a policy or making certain beneficiary-designation changes may have gift tax consequences. Form 712 can help document the policy’s value on the relevant date.

3. Reporting insurance owned on another person’s life. A deceased person may have owned a policy insuring someone else. The estate tax treatment can depend on the ownership rights and the specific facts.

4. Documenting a policy transferred before death. The timing of a transfer can be important. Form 712 requests information about assignments and transfers, including whether the policy was transferred within the three years before the insured person’s death. <Cite refs={[“turn204637view0″,”turn475660search12”]}/>

Not every life insurance policy requires Form 712. Whether it is needed depends on the facts and the reporting requirements for the particular estate or gift tax return.

What Information Does Form 712 Include?

The insurance company uses its records to complete the applicable portions of the form. The information may include:

• The insured person’s name and identifying information.
• The insurance company’s name and address.
• The type of policy and policy number.
• The policy owner and beneficiary information.
• The date the policy was issued.
• The face amount of the insurance coverage.
• Premium information, dividends, and policy benefits.
• Outstanding policy loans or other indebtedness.
• The value of the policy or proceeds at the relevant date.
• Information about assignments, transfers, or beneficiary designations.

The form also includes calculations used to determine certain policy values for gift or estate tax purposes. The valuation method can differ depending on whether the policy is still being paid for or is fully paid up or funded with a single premium. <Cite refs={[“turn204637view0″,”turn475660search12”]}/>

Who Completes Form 712?

A key point is that Form 712 is generally completed and certified by an officer of the insurance company who has access to the company’s records. The executor or tax preparer usually requests the statement when preparing the relevant tax return.

If you are the executor of an estate, you may need to contact the insurance company and ask how to obtain Form 712 for the policy. Be prepared to provide the policy number, the insured person’s information, the date of death if applicable, and documentation establishing your authority to request the information.

If a policy was transferred or a beneficiary designation was changed, provide the dates and related records to the tax professional preparing the return.

The IRS instructions state that a separate Form 712 should be prepared for each policy. The completed statement is returned to the executor or representative who requested it; it should not be sent directly to the IRS as a stand-alone filing. Follow the instructions for the underlying tax return to determine how it should be submitted. <Cite refs={[“turn204637view0″,”turn204637view1”]}/>

Does Life Insurance Automatically Have to Be Included in an Estate?

No. Life insurance treatment for estate tax purposes depends on more than whether a person received a payout.

For example, the proceeds may be payable directly to a named beneficiary, but the policy may still need to be evaluated for federal estate tax purposes based on ownership and other rights held by the deceased person. Certain transfers of policy ownership or incidents of ownership can also affect the analysis.

It is also important to distinguish estate tax reporting from income tax treatment. Life insurance proceeds paid because of the insured person’s death are generally excluded from the beneficiary’s gross income, although exceptions can apply, such as interest paid on proceeds. That income tax rule does not automatically settle whether the policy is relevant to the deceased person’s estate tax calculation.

For these reasons, a tax professional should review the policy ownership, beneficiary arrangements, transfer history, and estate circumstances rather than assuming the proceeds are either always taxable or always excluded.

Common Mistakes to Avoid

When dealing with Form 712, avoid these common errors:

• Assuming the beneficiary, rather than the insurer, must complete the form.
• Waiting until the estate tax return is nearly due before requesting policy information.
• Overlooking a policy owned by the deceased person that insures someone else.
• Failing to disclose prior transfers or beneficiary changes to the estate tax preparer.
• Treating the insurance face amount as automatically equal to the value required for every tax purpose.
• Assuming that life insurance proceeds are always excluded from estate tax calculations because they go directly to a beneficiary.

Accurate documentation can help the executor and tax preparer determine the appropriate reporting treatment.

How AIM Financial Can Help With Tax Preparation Questions

Estate and gift tax reporting can involve more than a standard individual income tax return. If you are managing an estate, reviewing life insurance documents, or trying to understand which tax forms may be necessary, it is useful to organize the relevant paperwork and seek professional guidance early.

AIM Financial provides tax preparation assistance and tax education for individuals and families in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan. Contact AIM Financial to discuss your tax preparation needs and the documents you may need to gather.

Complex estate tax matters may require assistance from a tax professional or attorney with specialized estate and gift tax experience.

Final Thoughts

IRS Form 712 is an important supporting document in certain estate and gift tax situations involving life insurance. It provides information from the insurer about policy ownership, benefits, transfers, and value. Although it is not a standard individual income tax return, it can be essential to accurately preparing the related federal tax return.

For more information about tax preparation and required tax documents, contact AIM Financial in the Grand Rapids area to discuss your questions and next steps.

This article is for general educational purposes only and is not individualized tax or legal advice. Always consult the latest IRS form and instructions and a qualified professional about your specific circumstances.