Qualified personal residence trusts (QPRTs) hold property that can be transferred at a discount to beneficiaries after a certain time period, essentially reducing the gift tax and removing the property from the estate. QPRTs are good for couples with assets worth more than $10 million or with properties likely to rise in value. These trusts help secure homes with heightened emotional value because, oftentimes, they are not seen as a classic investment. The QPRT can also hold a primary home or a vacation home as well as fractional interests of a home to be divided up amongst children. The more time the home spends in the trust, the bigger the discount because the value of the home is assessed at the time of the trust’s establishment. However, the grantors must outlive the specified term or else the property value will be assessed at death and included in the estate. Ultimately, QPRTs work best when families can agree on how a house fits into their legacy.
See Matt Miller, Holding Vacation Homes in Trust, Barron’s, November 4, 2016.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
