Legal structure
Qualified Personal Residence Trust (QPRT)
A trust under IRC §2702 into which a grantor transfers a residence while retaining the right to live there for a fixed term.
Typical purpose
Transfer tax planning involving a personal residence.
How it operates
Grantor lives in the home for the term; afterward it passes to remainder beneficiaries.
Who might use it
Individuals with high-value homes and estate tax exposure.
Assets commonly involved
- ◆Primary or secondary residence
Potential advantages
- ◆Potentially reduced gift value
Legal and tax limitations
- ◆Grantor must outlive the term
- ◆Rent required after term
- ◆Loss of step-up in basis
Establishment & administration
- ◆Strict regulatory terms
- ◆Appraisal
- ◆Gift tax return
Common mistakes
- ◆Choosing an unrealistic term
- ◆Ignoring post-term rent
Questions to ask a professional
- ◆Which state's law should govern this arrangement, and why?
- ◆Who should serve as trustee and successor trustee?
- ◆How will the trust be taxed at the federal and state level?
- ◆What assets must be retitled, and who handles the transfers?
- ◆What ongoing records, filings, and reports will be required?
Educational information only. Trust law varies by state; consult qualified legal, tax, and financial professionals before acting.
Next step
Move from understanding to a properly reviewed plan.
Discuss a Qualified Personal Residence Trust (QPRT) With TangierEducational information only. Not legal, tax, or investment advice.