Unlike the QPRT
, there is no trust term that the grantor must outlive.
Clients may also create more than one QPRT
for different beneficiaries and transfer partial tenant-in-common interests in the property to each trust.
The decision to create a QPRT
requires balancing the potential estate tax savings, based in part on current interest rates, against the consequences of relinquishing ownership to the next generation.
By contrast, real estate that passes to your heirs outside a QPRT
enjoys a step-up in basis; that is, any gain on its subsequent sale is based on its fair market value at the time of your death, not on what you paid for it.
The 98-year lease technique in conjunction with an expiring QPRT
generally works as follows: The client enters into a 98-year lease prior to the expiration of the QPRT
term and records that lease.
The longer the GRAT or QPRT
term, the smaller the value of the gift to the GRAT or QPRT
beneficiaries for gift tax purposes.
2702(a)(3)(A)(ii), a QPRT
allows a grantor to transfer a persona] residence to heirs at a reduced transfer tax cost, while continuing to use the property for a specified term.
2702-5(b) and (c) provide for two types of personal residence trusts; the QPRT
is the more flexible and commonly used.
Currently, regular personal residence trusts and QPRTs
may be established, allowing the contributor of the residence to continue living in it without requiring the trust to pay him an annuity or unitrust amount.
There are many advantages to using a QPRT
to transfer a primary residence, including:
If a QPRT
instrument fails to include the required prohibition, the retained interest will be assigned a value of zero under Sec.
B contributes the personal residence to a QPRT
when the Sec.