California

Qualified Personal Residence Trust

Making a gift of a personal residence to a qualified personal residence trust (QPRT) is a straightforward strategy for removing the value of a home from an individual’s taxable estate. A QPRT is an appealing estate planning device because it combines significant estate and gift tax savings with minimal lifestyle changes, while avoiding fears that too much is being given away.

QPRTs are an excellent technique for transferring substantial assets at a discount with minimal impact on the client’s standard of living. They are also a flexible vehicle which permits the sale of the home and purchase of a substitute residence.

However, the terms and specific advantages of a QPRT require proper planning and administration in order to avoid potential and substantial adverse tax consequences. In many cases, this will be combined with additional trust arrangements in order to maximize gift, estate and even income tax liabilities for surviving family members.