Qualified Personal Residence Trust
Alphabet Soup: QPRT and GRITS
The single biggest asset most people have is their home. Unfortunately, homes in high-value markets like California or cities such as New York or Chicago can quickly put a person or couple of modest means and modest assets over the estate tax threshold. A qualified personal residence trust can prevent this from happening to you.
What Are Qualified Personal Residence Trusts (QPRTs)?
Qualified personal residence trusts are a type of grantor-retained interest trust (GRIT) in which the individual grantor(s) put their residence into a trust and continue to live in the house for a predetermined number of years. Qualified personal residence trusts offer many benefits. One is that since the ultimate beneficiaries (children in most cases) receive no benefit from the gift during the term of the QPRT — the transfer is made at a discount from the residence's existing value for purposes of the gift tax. If the grantor(s) die during the term of the QPRT, then the residence is still part of their estate.
Grantor Retained Interest Trusts (GRITs)
Qualified personal residence trusts are just one type of GRIT. Others include the standard grantor-retained interest trust (GRIT), the grantor-retained annuity trust (GRAT) and the grantor-retained unitrust (GRUT).
Since it requires considerable book-keeping, a GRAT is most often used by individuals with larger estates. What it does is provide a fixed amount of income to the grantor on an annual basis. However, this income does cost the grantor a significant amount of control over the assets while the GRAT is operative. The GRIT, by contrast, provides the grantor with income from the trust for a preset period of time rather than an annual fixed amount as in a GRAT.
What grantor-retained interest trusts have in common is that they allow real assets to be discounted below their actual value for purposes of estate taxation — something that means real savings for people with large estates.
Types of Trusts We Establish:
- Revocable/Irrevocable Trust
- Irrevocable Life Insurance Trust
- Supplemental Special Needs Trust
- Generation Skipping Trust
- Charitable Trusts
- Credit Shelter/Applicable Exclusion Amount Shelter Trust
- Pet Trust
- Estate Freeze Trust
- Qualified Personal Residence Trust (QPRT)
- Qualified Domestic Trust
- Life Partner and LGBT
