• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Wilcox Attorneys, PA

Wilcox Attorneys, PA an Arkansas Estate Planning & Trust Information Center

Northwest Arkansas Estate Planning Attorneys (479) 443-0062

Client Vault
  • Home
  • Our Firm
    • Our Firm
    • About the American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • News & Events
    • Speaker Connection
  • services
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • Legacy Planning
    • Pet Planning
    • Secure Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Webinars
  • Practice Areas
  • Resources
    • DocuBank
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Articles
      • Estate Planning Checkup
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • Frequently Asked Questions
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • Incapacity Planning
      • Legacy Wealth Planning
      • Medicaid Planning
      • Pet Planning
      • Probate
      • Trust Administration & Probate
    • Newsletters
    • Pre Consultation Form
    • Trust Administration & Probate Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
  • Reviews
    • Our Reviews
    • Review Us
  • Contact Us
  • Blog

What is a Qualified Personal Residence Trust?

November 6, 2014 by Deb Sexton Leave a Comment

Qualified Personal Residence TrustOne of the most valuable assets is your residence.  If you are considering estate planning, you may already be aware of different types of trusts that are available.  An important type of trust for protecting your personal residence is referred to as a QPRT, which stands for Qualified Personal Residence Trust.  When created properly, a Qualified Personal Residence Trust can provide a wonderful benefit to you and your family.

How the Qualified Personal Residence Trust works

A Qualified Personal Residence Trust is designed to hold your primary or secondary residence in an irrevocable trust so that, upon your death, the value of your residence will not be included as part of your taxable estate.  If established correctly, you will be able to use your residence for a specified period of time (retained income period).  When that period ends, your residence will be transferred to your final beneficiaries, whom you name in the QPRT.  Because you will no longer have ownership rights in the residence after the retained income period expires, estate taxes can no longer be assessed against that residence.

Steps required to create a Qualified Personal Residence Trust

Creating a Qualified Personal Residence Trust requires just a few steps.  First, an irrevocable trust agreement is drafted, which will specify both your initial and successor trustees.  Your trust agreement will also indicate the amount of time you wish to retain the right to live in the residence, which is referred to as the “retained income period.”  Since a Qualified Personal Residence Trust is irrevocable, these provisions are extremely important, as they cannot later be modified.

The next big step is to fund the trust.  This is accomplished by transferring your residence to the trust; in other words, executing a new deed to the residence, in the name of the trust.  Before this can be done, you will be required to obtain a recent appraisal of your property, in order to determine the current value of the residence.  This is required for gift tax purposes.  Establishing the fair market value of your residence is necessary for you to report your gift of the property to the IRS.

The final step involves transferring ownership of your residence to your eventual beneficiaries.  When the retained income period ends, the trustee must transfer ownership of your residence from the name of the trust to the names of your final trust beneficiaries.  A new deed will be recorded in the land records where your residential property is located.  You can still live in the residence after the retained income period ends, as long as you pay fair market rent.  This will also help to further reduce your taxable estate, allowing you to pass more of your assets on to your beneficiaries, without depleting your annual gift tax exclusion.

State and federal estate planning laws often change, so be sure to consult with an estate planning attorney for the most current legal advice regarding Qualified Personal Residence Trusts.  If you have questions regarding a trust, or any other estate planning needs, please contact Wilcox Attorneys, PA online or by calling us at (479) 443-0062.

  • Author
  • Recent Posts
Deb Sexton
Latest posts by Deb Sexton (see all)
  • Estate Planning is Essential Whether You Are Married or Not - April 25, 2018
  • Income Tax Basis in Estate Planning – Part 2 - April 23, 2018
  • The Downsizing Generation: How to Handle a Surplus of Stuff When a Loved One Ages - April 18, 2018

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Wilcox Attorneys, PA

DOWNLOAD OUR FREE ESTATE PLANNING WORKSHEET

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

Subscribe to Our Blog

Subscribe to our blog for all the latest estate planning news and updates!

Office Address

Fayetteville
2766 Millennium Drive
Fayetteville, AR 72703
Phone: (479) 443-0062

Office Address

Prairie Grove
1100 Division Street, Suite 4
Prairie Grove, AR 72753
Phone: (479) 846-6026

( By Appointment Only )

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 12:00 PM

Map

map for office
  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

footer-logo

© 2023 American Academy of Estate Planning Attorneys, Inc.