What Does Qualified Personal Residence Trust (QPRT) Mean?
Qualified personal residence trust refers to a specific type of trust that allows the creator to remove their personal home from their estate for the purpose of reducing the amount of gift tax incurred when transferring the assets to a beneficiary. It allows the owner of the residence to remain within the property for a certain period of time with a retained interest in the house. Once the period is over, the interest remaining in the premises is transferred to the beneficiaries as a remainder interest.
Insuranceopedia Explains Qualified Personal Residence Trust (QPRT)
The value of the property during the period of retained interest is calculated based on applicable rates; this depends on the length of the trust. A qualified personal resident trust may be useful if the creator wishes to transfer their personal residence to a family member at some point in the future and they want to reduce the overall transfer tax cost of the transfer. A qualified personal resident trust is most often a permanent trust. The creator of it cannot gain back the ownership of the estate. When the trust term expires, the estate is transferred automatically to the beneficiaries of the trust.