Qualified Personal Residence Trust
- How does it work?
- What are the key benefits of a QPRT??
- If I have a second home, can I use the QPRT for both homes?
- Is a gift tax return required when a gift is made to a QPRT?
- Are there any other tax benefits offered by a QPRT?
- What If I Die During the QPRT's Term?
- Does my age and the QPRT term affect the tax consequences of the QPRT?
- What if I outlive the QPRT's term and want to continue living in the residence?
- Can the residence be sold while it is in the QPRT?
- Will my children receive the residence with step up in basis at the End of the QPRT Term?
- Do any income tax returns have to be filed in connection with a QPRT?
Does my age and the QPRT term affect the tax consequences of the QPRT?
The term of the QPRT is an important factor in determining the tax savings freezing of future appreciation of a QPRT. The longer the QPRT term, the greater your tax savings and the more future appreciation you can freeze at current value. Remember that if you do not survive the term of years you establish when setting up the QPRT, the entire value of your residence will be pulled back into your taxable estate. Therefore you should at your life expectancy based on your health, family history and actuarial tables, and select a term of years that is two-thirds to three-quarters your life expectancy. Often this strategy will be combined with an Irrevocable Life Insurance using Term Life insurance for the same term of years. In this way, even if you do not survive the term, the life insurance purchased with cheap dollars will be available to pay the estate tax and eliminate any need to sell the residence to pay the taxes