What is Qualified personal residence trust?
In short
With a qualified personal residence trust, the owner transfers a home to a trust but keeps the right to live in it for a set term. The taxable gift is only the value of the remainder, reduced by the retained interest.
Key takeaways
- If the owner survives the term, the home and its later growth are out of the estate.
- If the owner dies during the term, the home is included in the estate.
- The beneficiaries take a carryover basis, with no step-up at death.
Where it's tested
TCP: Estate & Gift Tax Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A client's total estate is well below the $15 million exemption. The client asks whether to gift highly appreciated stock to children now or hold it until death. From a pure tax standpoint, which is generally better and why?