Meurer & Potter Law Office, Denver, Colorado

A Residence Trust, or more specifically a Qualified Personal Residence Trust (QPRT), is an irrevocable trust that removes a residence from your taxable estate using a gift tax exemption. The transfer of such a valuable asset into the trust can provide significant savings on future gift and estate taxes. At the Meurer & Potter Law Office, we typically use this trust option for clients with substantial estates subject to equally substantial taxes.

A grantor can establish just two QPRTs and they must be either a primary residence or secondary home such as their beach house, mountain cabin or home on the lake. Real estate investment properties are excluded. Once the residence is transferred into the trust, it cannot easily be undone and is considered a lifetime transfer. However, the grantor will be able to live, basically rent-free, in the residence for the trust term.

Benefits of Using a Qualified Personal Residence Trust

  1. The current and future value of your primary or secondary residence is removed from your taxable estate for pennies on the dollar.
  2. During the trust term, the grantor/homeowner lives rent free and can continue to use the residence for tax deduction purposes.
  3. A QPRT protects against the possibility of lifetime gift tax exemption or estate tax exemption changes, locking in its current value.
  4. This trust makes it more beneficial for heirs to hold on to the property, thus protecting the legacy you’ve spent a lifetime creating.

Like other estate planning options, there are downsides and factors to consider with a Qualified Personal Residence Trust. From creating complexities if you decide to sell the residence, to the possibility of you passing away before the retained income period ends (thus causing the residence to be added back to your taxable estate at full market value), our attorneys at the Meurer & Potter Law Office can help you make the right choice for your estate.

Call or contact our offices today to schedule your free consultation: 303-991-3544