Qualified Personal Residence Trust

By: Martin M. Shenkman, CPA, MBA, JD

A Qualified Personal Residence Trust, or QPRT, is a special trust designed to hold ownership of part or all your personal residence (home or second home). The trust is established for a number of years (term) by you (grantor). After the term ends your heirs, typically children (but not later generations) receive ownership of the house. In some cases the QPRT on ending transfers title to a trust for your heirs instead of directly to them. During the term of the QPRT you can live in the house rent free. For gift tax purposes a QPRT reduces, often substantially, the value of the house. All appreciation post date of transfer is also removed from your taxable estate. If you die before the term ends the house reverts back to your estate.

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