Qualified Personal Residence Trust
A Qualified Personal Residence Trust (QPRT) is an estate planning tool that allows homeowners to transfer their primary or vacation home to heirs at a reduced gift tax value while continuing to live in the property for a set term. It minimizes estate taxes and secures long-term family ownership of real estate.
Key Features of a Qualified Personal Residence Trust
- Reduces estate tax liability – Transfers a home at a discounted value, lowering estate taxes.
- Allows continued residence – The grantor can live in the home for a specified period without paying rent.
- Preserves family real estate – Keeps homes within the family while minimizing tax burdens.
- Potential appreciation benefits – Future property value growth is excluded from the taxable estate.
- Provides structured ownership transfer – Ensures a smooth transition of homeownership to beneficiaries.
Our Qualified Personal Residence Trust Services
Looking to transfer real estate while minimizing taxes?
- Custom QPRT structuring – We design trusts tailored to your home and estate planning goals.
- Gift tax reduction strategies – We help structure the transfer to maximize tax savings.
- Trust administration and compliance – Our team ensures proper legal execution and management.
We specialize in estate planning solutions that protect real estate assets while minimizing tax exposure.
Who Should Consider a Qualified Personal Residence Trust?
A Qualified Personal Residence Trust is ideal for homeowners who want to transfer their home to heirs while reducing estate and gift taxes. It is particularly beneficial for:
- High-net-worth individuals – Helps lower estate taxes for valuable real estate holdings.
- Families wanting to retain real estate – Ensures primary or vacation homes stay in the family.
- Homeowners in appreciating markets – Removes future appreciation from estate tax calculations.
- Individuals with long-term estate planning goals – Provides structured ownership transfers over time.
- Those concerned about probate – Avoids delays and costs by keeping the home out of probate.
How to Set Up a Qualified Personal Residence Trust
Establishing a QPRT requires precise legal structuring to comply with IRS rules. Here is our process:
- Initial consultation – We assess your estate, real estate holdings, and tax planning needs.
- Trust drafting – Our attorneys create a customized QPRT agreement.
- Deed transfer – The home is transferred into the trust at a reduced tax value.
- Retention period establishment – The grantor retains the right to live in the home for a set number of years.
- Final transfer to heirs – After the trust term ends, ownership is passed to beneficiaries.
Disadvantages of a Qualified Personal Residence Trust
While a QPRT offers significant tax benefits, it has some limitations:
- Loss of control after the term ends – The home belongs to beneficiaries after the trust period.
- Requires long-term planning – The grantor must outlive the trust term to receive full tax benefits.
- Rent payments may be required – If the grantor stays in the home after the trust period, rent must be paid to the heirs.
- Limited asset protection – Does not fully shield the home from creditors.
- Irrevocable trust structure – Once established, the trust cannot be modified or revoked.
Qualified Personal Residence Trust FAQ
Selling the home may cause the trust to terminate, requiring tax planning adjustments.
The home is included in your estate, negating the tax benefits of the trust.
Yes, a vacation home can be placed in a QPRT, but a separate trust may be required.
Yes, the grantor remains responsible for property taxes and maintenance during the trust term.
It provides some protection, but a fully irrevocable trust may offer stronger asset shielding.
The home transfers to the beneficiaries, and if the grantor wants to continue living there, rent must be paid to the new owners.
Best Alternatives to a Qualified Personal Residence Trust
If a QPRT is not the right fit, consider these alternatives:
- Revocable Living Trust – Keeps real estate out of probate but does not offer tax benefits.
- Irrevocable Trust – Provides stronger asset protection and estate tax planning.
- Family Limited Partnership (FLP) – Allows structured real estate transfers with liability protection.
- Life Estate Deed – Grants heirs ownership interest while allowing the grantor to live in the home.
- Gifting Strategy – Transfers homeownership directly but may result in higher gift tax implications.
Each option serves different estate planning needs. Our team can help determine the best strategy for securing your real estate while minimizing tax exposure.
Protect Your Home and Reduce Taxes with a QPRT
A Qualified Personal Residence Trust allows you to transfer your home to heirs while reducing estate taxes and ensuring long-term family ownership. At SJF Law Group, we help structure QPRTs that align with your estate planning goals.
Contact us today to set up a QPRT that secures your home and financial legacy.
