How Does a Qualified Personal Residence Trust Really Work?
The main benefit of a Qualified Personal Residence Trust, or QPRT for short, is the removal of the value of a primary or secondary residence from your estate at a reduced gift tax value. This, in turn, will remove the value of the property from your estate for estate tax purposes. But before you can really understand how a QPRT really works, you’ll first need to understand what a QPRT is and what happens during each phase of the trust. Once you understand the phases and terms associated with a QPRT, you will be ready to understand its benefits. Calculating the Value of the Gift to a QPRT When you transfer your family homestead or vacation property into the name of your QPRT, you are deemed to have made a gift to the ultimate beneficiaries of the QPRT for gift tax purposes. But how is the value of the gift calculated?
