Home economics: A QPRT can help you save taxes
Abstract: From a gift and estate tax perspective, costs are lower when an asset is transferred to beneficiaries sooner rather than later. But this creates a problem for those who want to continue living in their home indefinitely. An effective solution is a qualified personal residence trust (QPRT). When a home is transferred to a QPRT, its value for gift tax purposes is heavily discounted and any future appreciation is removed from one’s taxable estate. Plus, the transferor retains the right to stay in the home for many years. This article looks at the pros and cons of a QPRT, while a sidebar shows why it’s important to get the terms in writing.