My father had a great expression "Every golf shot pleases somebody" Of course, this will not apply if you are playing alone, but golf is a social sport, so people rarely play alone. Obviously, what the expression means is that from negatives we can also get positives.
The current slumbering real estate market may, in fact, be a blessing for people whose homes, or vacation homes, have declined in value. If there is truth in the statement that real estate is extremely cyclical, we may have reason to believe that there will be a rebound in prices in the not too distant future.
Lower current prices have very few real benefits. One of them, however, concerns making gifts of real estate within your family at this time. Creating a Qualified Personal Residence Trust ("QPRT"), and then transferring you family home,or vacation home, may prove a wise thing to do in the current environment. The lower the value of the real estate, the lower the value of the lifetime gift which you are making.
QPRT's have some flaws. Creating one may prevent your children from obtaining a "stepped up" basis when you pass away and bequeath the property by your Will. On the other hand, with the muddled status of the estate tax, there is no certainty that "stepped up" basis will be part of new legislation so there may be reason to act now.
At Topkins & Bevans, the Massachusetts law firm where I serve as Senior Partner, we are doing more QPRT transactions this year than is the past three years combined. Smart people are taking advantage of the real estate downturn to take real estate out of their estates. If you have an interest in knowing more about QPRT's, contact me. I can either assist you in preparing a QPRT, or I can refer you to competent counsel in your state to assist you. This is an option which merits looking into, especially at the present time.
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