Asset Protection for Your Home
Congress added the QPRT to the law in 1989. A QPRT is designed to transfer your principal residence, and up to one vacation residence per spouse, to your children at a reduced gift tax cost. Perhaps of greater importance, It also effectively asset protects your home's equity.
What Is a QPRT?
A QPRT is an irrevocable trust into which you transfer your residence. The QPRT lasts for a fixed term of years that you select. You retain the right to live in the residence for that term rent-free and maintain the responsibility of maintenance, property taxes and any other home ownership expense incurred. At the end of that term, the home is distributed (or better yet, continued to be held in trust) for the benefit of your children.
If you wish to continue living in the residence at the end of the term, you must pay rent to the trust for your children's benefit. The gift potential of the QPRT only works if the parent survives the term of the QPRT; otherwise, the residence comes back into the parent's estate. The bottom line? Your home is protected and you save estate tax.
Asset Protection
The QPRT is an excellent asset protection vehicle since you no longer own the property once the QPRT is established. In today's environment the QPRT is best been used as a pure asset protection device for family real estate. Estate taxes in 2011-2012 are not a significant concern until your estate exceeds $10 million.
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For Technical Information About Qualified Personal Residence Trusts (QPRTs),
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In Our Basic Asset Protection Plan, With Exceptions: |
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- Your Safe Assets are Transferred to an FLP
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- Your Home and Vacation home are Transferred to a QPRT
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- Your Business is Transferred to an LLC
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- Your Rental or Commercial Real Estate is Transferred to an LLC
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- All Interests in these Entities are Held by Your Living Trust.
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In our Intermediate Asset Protection Plan, With Exceptions: |
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- All Interests in the Above Entities are Held by Your DAPT
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- PITs are Set Up for Your Children
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