Qualified personal residence trusts (QPRTs) may have outlived their usefulness and cause more damage to an estate plan than they are worth. QPRTs were popular in the 1980s when the Federal estate tax exemption was $600,000. The increase of the exemption to the current $5.43 million takes away the advantage of QPRTs for most individuals, but leaves the downside, which is a stagnate basis when the ownership of the residence is transferred resulting in a larger gain and higher capital gains tax. Possible solutions for existing QPRTs vary based on state law.
See Michael Ide, How QPRTs Went From Effective Estate Planning to Time Bomb, Value Walk, Jan. 21, 2015.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
