A good way to reduce estate taxes and get some additional asset protection on your home is through the use of something known as a qualified personal residence trust (QPRT).  It is a form of “split-interest” estate planning.  A QPRT divides a personal residence into a current use period and a remainder use period.  The owner transfers the residence to a properly drafted irrevocable trust.  The owner retains the right to use the property as a personal residence for a set term of years. At the end of this period, the owner’s right to use the residence might terminate, unless otherwise provided, and the residence goes to the beneficiaries of the trust.

A QPRT uses the values of the current use period and remainder use period to minimize estate taxes (which are based upon certain interest rate assumptions provided by the IRS).  Using a QPRT helps ensure that the residence and any appreciation on the value of that residence is excluded from the estate.  Given the present value of the future gift and the fractional interest of the ownership, the QPRT can significantly reduce estate taxes.  It also provides excellent protection of the residence from creditors.

A QPRT is an advanced form of estate planning, so it can be complex.  If you would like to provide additional protection on your home, while minimizing taxes, a QPRT may be right for you.  To find out more or to schedule a free consultation, contact our office today at 888.222.1328.

Contributed by MH Arrowhead, Prescott and Flagstaff Estate Planning Attorney and Partner, David T. Eastman

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with MH.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.