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Simple English definitions for legal terms

qualified personal residence trust (QPRT)

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A quick definition of qualified personal residence trust (QPRT):

A qualified personal residence trust (QPRT) is a type of trust that helps people reduce estate and gift taxes by moving their personal residences into a trust. The person who creates the trust (the grantor) transfers their home to the trust for a set amount of time while still living in it. After that time is up, the property goes to the beneficiaries. The value of the property for tax purposes is calculated based on the time the property was transferred to the trust, not when it was transferred to the beneficiaries. This can help reduce taxes because it freezes the value of the property at the time it was transferred to the trust, even if the property increases in value over time. However, there are some important rules that must be followed for a QPRT to work, such as the grantor surviving the trust and only transferring two personal residences to the trust.

A more thorough explanation:

A Qualified Personal Residence Trust (QPRT) is a type of trust that helps minimize estate and gift taxes by transferring personal residences into a trust. The grantor transfers a residence to the trust for a set amount of time while still living in the residence. After the time ends, the property goes to the beneficiaries. The value of the property for tax purposes is calculated based on the time the property was transferred to the trust, not when transferred to the beneficiaries. The value of the property is reduced by the grantor’s right to live at the property for the length of the trust.

For example, if a person transfers their $1 million home to a QPRT for 10 years and continues to live in the home, the value of the property for tax purposes will be calculated based on the time the property was transferred to the trust, not when transferred to the beneficiaries. If the person lives in the home for the entire 10 years, the value of the property will be reduced by the grantor’s right to live at the property for the length of the trust. If the home increases in value to $2 million during the 10 years, the beneficiaries will receive the home at the end of the trust for $1 million, and the grantor will have avoided paying taxes on the $1 million increase in value.

However, there are some important requirements for a QPRT to be recognized by the IRS. First, the beneficial tax treatment only occurs if the grantor survives the trust, and therefore, the trust cannot be a life estate nor can the grantor die before the trust ends. Second, the grantor can only continue living at the residence after the trust ends by gaining a fair-market value lease from the beneficiaries, as they now own the property. Thirdly, a person can only transfer two personal residences to a QPRT. Any commercial property or non-real property (e.g. fixtures and appliances) will not count. Lastly, there are some tricky generation-skipping tax (GST) rules that must be followed, such as the predeceased parent rule, which must be followed in order to maximize GST exemptions.

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Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
CynicalOops
22:37
Calvinamala Harris
jackfrost11770
23:16
should i start using letterboxed again
Dkk
23:25
@jackfrost11770: if you want but like it aint for me
dk do u ever eat at bk
Dkk
23:48
@chickenburgahfart: I would do that in the Army if really desperate for food or if I had to work through lunch. One of the few fast food places I go to.
bk so slept on
Dkk
0:23
I will take In N Out everyday over it when I can though.
texaslawhopefully
1:22
In N Out is not only the best fast food place, but the prices too are fantastic
Dkk
1:27
Indeed, indeed.
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