If you have never heard of a Qualified Personal Residence Trust, you are not alone. Although this particular estate planning tool was once popular, it became less well-known over time. However, this tool may still help various Americans transfer their homes to their children or other trusted beneficiaries without incurring a substantial tax penalty. As a bonus, this particular tool allows a homeowner to keep living in his or her residence despite the technical transfer. In general, one must specify how long the terms of the trust will last.
A QPRT does not make sense for everyone and for every estate planning scenario. However, it can be a uniquely beneficial tool for individuals whose homes are likely to appreciate at a rapid value sometime before they pass away. This is an especially handy estate planning tool for those whose appreciating homes make up a significant fraction of their estates.
QPRTs and other specialized legal tools like them are just some of the reasons why it remains beneficial for Americans to speak with an attorney experienced in matters of estate planning law. Attorneys are generally more aware of the legal tools available for any given set of circumstances than the general public is.
If a QPRT may be right for you and your beneficiaries, do not hesitate to contact an attorney with your questions. Depending on your specific situation, this may or may not be the best estate planning tool for you in light of various tax laws, other estate planning tools and your attorney’s experienced judgment.
Source: Accounting Today, “Home Transfers to Children Can Work for Estate Planning if Done the Right Way,” Roger Russell, May 14, 2015