With the Hartford, CT Real Estate Market Down, Consider Adding a Qualified Personal Residence trust to your Estate Plan!

By
Education & Training with Tax Rep LLC

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One of the advanced estate planning techniques our firm uses in the Hartford, CT market with taxpayers who own valuable real estate is a “Qualified Personal Residence Trust”, or QPRT.

 

A QPRT is an irrevocable trust created by the property owner that is designed to hold a residence for the taxpayer’s benefit for a number of years.  After the number of years has expired, the property is then held for the benefit of individuals named by the taxpayer when the trust was created, usually descendents.

 

When a QPRT is created the taxpayer who forms the trust, called the Grantor or Settlor, actually makes a taxable gift of the residence to the beneficiaries.  However, because the Grantor retains use of the property for a set term of years the gift is discounted, creating a tax break for the Grantor.

 

In our office in the Hartford, CT area, we also point out the other major benefit to using a QPRT is that all future appreciation of the property will be out of the grantor’s estate.

 

As an example: Joe and Mary live in Hartford, CT but own a summer home on the Connecticut shore jointly, which is valued at $300,000.  As part of their estate planning, Joe and Mary create a QPRT for the benefit of their children and transfer their summer home to the QPRT, retaining use of the residence for themselves for the next ten years.  Instead of making a taxable gift of $300,000, Joe and Mary would only make a gift of $179,142.  The other $120,858 is the value of the ten-year interest retained by the Joe and Mary.  Any future appreciation of the property would be out of Joe and Mary’s estates.

 

With real estate values down currently, we are telling clients that come into our office in the Hartford, CT area that now is a great time to consider shifting that second home to the kids and grandchildren via an irrevocable QPRT.  They obtain the discount, shift future appreciation away, reduce their estate and can assure the home stays in the family for the next generation.

 

If you should have any questions or concerns about estate planning with a Qualified Personal Residence Trust, or QPRT, in Hartford, CT, I would be happy to help.  Please feel free to contact me anytime at (860) 657-9040 or e-mail me at egreen@convicerpercy.com.

 

Eric L. Green, Esq.

Tax Counsel

Convicer & Percy LLP

Phone: (860) 657-9040

E-Mail: egreen@convicerpercy.com

Website: www.convicerpercy.com

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