Qualified Personal Residence Trust (QPRT) Attorney San Antonio TX
A Qualified Personal Residence Trust (QPRT) is an estate planning tool that allows individuals to transfer their primary or secondary residence into an irrevocable trust while retaining the right to live in the property for a specified term. This strategy can significantly reduce the value of the property for estate tax purposes, potentially saving a substantial amount in taxes while preserving the use of the home during the grantor’s lifetime.
How a QPRT Works
With a QPRT, the grantor transfers ownership of their personal residence or vacation home into a trust but retains the right to live in the property for a term of years, typically ranging from 2 to 20 years. At the end of the specified term, ownership of the property passes to the beneficiaries, such as children or other heirs. While the grantor continues to live in the home, the value of the property is reduced for gift and estate tax purposes, as the transfer is considered a gift to the beneficiaries, but the gift’s value is discounted based on the retained interest.
Tax Advantages of a QPRT
The primary advantage of a QPRT is the potential reduction in estate taxes. Because the grantor retains the right to live in the property, the value of the gift is discounted, which can significantly lower the taxable value of the residence. Additionally, if the grantor outlives the term of the trust, the residence will no longer be part of their estate, and future appreciation will pass to the beneficiaries free of estate tax.
Considerations
While a QPRT offers substantial tax benefits, it requires careful planning. If the grantor dies before the trust term ends, the full value of the property will be included in the estate for tax purposes. Additionally, the grantor must be comfortable with transferring ownership of the property to beneficiaries, as they will gain full control once the term expires.
Contact Carroll Law Group Today
A Qualified Personal Residence Trust (QPRT) can be an effective way to reduce estate taxes while allowing you to maintain use of your home for a set period. If you’re considering a QPRT as part of your estate plan, contact Carroll Law Group. Our experienced estate planning attorneys can guide you through the process and help you make the best decisions for your estate and family.