Qualified Personal Residence Trusts
A qualified personal residence trust (QPRT) is powerful estate planning tool that allows you to transfer ownership of your home to a beneficiary of your choice, while still living in it. A QPRT has multiple benefits, including removing the home from your estate and protecting it from potential threats such as creditors. Additionally, this type of trust prevents your heirs from having to pay high estate taxes on the residence upon your passing.
Karen L. Brady is a knowledgeable Arvada, Colorado, attorney with more than 21 years of experience helping clients in the Greater Denver, JeffCo and Front Range areas meet their financial objectives through trusts and other techniques.
How Does a Qualified Personal Residence Trust Work?
A QPRT is an irrevocable trust that allows you to pass down your family home and one vacation home to your children or other descendants at a reduced gift value. This type of trust is a good option for individuals who have personal residences that are high in value. The residence is held in the trust for a limited time, during which you may continue to live in it. Once the trust terminates, the residence will be passed on to your beneficiary without any estate or gift taxes and the value of the home will be removed from your estate. You may continue to live in the residence through a rental agreement.
The length of time you choose to remain in your home is an important consideration. You must outlive the term of the trust, or the residence will be included and taxed as part of your estate.
Because the QPRT is a gift, it will be treated differently from a residence that is passed down to your heirs upon your death. If the property is sold, your loved ones could incur significant capital gains taxes that may outweigh any estate tax benefits.
Discuss Your Case With a Colorado Permanent Transfer of Property Lawyers
Brady, McFarland & Lord, LLC, can help you determine if a QPRT is the right option for you and your family. To schedule a free initial consultation, contact the firm online or call us toll free at 888-806-7304 or locally at 303-835-1811.