The Advantages Of a QPRT or Qualified Personal Residence Trust

by Bruce Givner on October 27, 2011

There are two types of advantages that come from transferring your personal residence to a qualified personal residence trust, which we refer to by its acronym, a QPRT. The first type of advantages to a QPRT are estate and gift tax advantages. If your home has $1,000,000 of equity, then transferring it to a QPRT is a way to reduce the gift value by – typically – 2/3rds when you are trying to move it out of your estate and give it to your children. You pick a term of years to continue living in the home rent free, and when that term ends the home goes from the QPRT to your children’s trust, and you start paying rent to the children’s trust, as a result of which your home is not included in your taxable estate.

The other type of advantage to a QPRT – the reason why we set up most QPRTs – is creditor protection. Once your home is in a QPRT, the equity is no longer attractive to some future creditor. All you have is the right to live in the home rent free for some term of years. The judgment creditor might be able to get the judge to move you out.  But the creditor can’t put in his own tenant and collect rent. The QPRT trustee is supposed to sell the home. And getting the trustee to sell the home at the right price, and then to pay you an annuity which the creditor can seize, is a nightmare for a creditor. That’s why a QPRT is a terrific creditor protection device for your home. To establish your QPRT contact Givner & Kaye today. (310) 207-8008

{ 2 comments… read them below or add one }

Jeremy Usman November 3, 2011 at 8:36 am

Well I sincerely enjoyed studying it. This article procured by you is very useful for proper planning.


admin November 3, 2011 at 9:45 am

Thank you. Have you already established your estate plan?


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