For Older People In Good Health With Expensive Residences Who Have Substantial Estate Tax Exposure
Background The Qualified Personal Residence Trust (“QPRT”) is a gift technique which was created by Congress as an exception to the general rules regarding gifts with retained interests. Generally, if you give away an asset but continue to retain an interest in it (such as the right to the income or use of the property), the IRS will include the full value of the property in your estate at your death. Presumably Congress was convinced to provide some transfer tax relief to people desirous of passing their personal residences to the next generation, some of which have been held by families for many years. This strategy is also appealing to a lot of people who like the idea of reducing their estate tax exposure by only giving away a future interest in a residence in which they can continue to live (at least for a certain term) without going out-of-pocket and reducing their spendable liquid assets.