Qualified Personal Residence Trust (QPRT): The Gift That Keeps Giving

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beach house 150x150 Qualified Personal Residence Trust (QPRT): The Gift That Keeps GivingCurrently, the tax and market condition planets have aligned to provide ideal conditions for those wishing to pass along a primary or vacation residence to consider a Qualified Personal Residence Trust (QPRT).

A QPRT allows an individual or married couple to gift up to two homes to their children and continue to live there.

The purpose of a QPRT is to remove the value of a grantor’s primary or secondary residence from their taxable estate.  A QPRT is an irrevocable trust, and at the time it is established, the grantor must also determine a retained income period before ownership is transferred to the beneficiaries.  The trick is to plan this time period so the grantor outlives the term – if the grantor dies before the term expires, the property is returned to the estate and is liable for estate taxes.

Once the retained income period is over, the grantor pays rent to the trust, with the beneficiaries becoming defacto landlords.  Rent payments are typically made to the trust through a brokerage-type vehicle so the beneficiaries pay no income tax on the payments.

For more information on QPRTs or other estate planning and asset protection vehicles, contact our Orange County estate planning law firm.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

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