If you are like most people and your home is one of your most valuable assets, a Qualified Personal Residence Trust (QPRT) can help lower the value of your estate, enabling you to reduce your estate tax burden, or take advantage of Medicaid for long term care. A QPRT is a type of revocable trust that removes your home from your possession, though it allows you to continue living in your home for as long as you wish. The attorneys at Strategic Counsel Law Group, L.C. assist clients with trusts, buy-sell agreements, family limited partnerships, and other estate planning tools used to avoid taxes, shield assets from creditors, or qualify for Medicaid.
What is a Qualified Personal Residence Trust?
A qualified personal residence trust is an irrevocable trust that removes your home (or homes) from your taxable estate. Individuals are allowed to have two QPRTs, while married couples can have up to three. However, the residential properties placed in qualified personal residence trusts cannot be used as rentals, Airbnbs, offices, or other non-residential use. The grantor must use these residential properties to live in.
How a QPRT Works
- The grantor funds the QPRT with residential property for an initial term, during which the grantor can live in the property just as before. The grantor should ideally outlive this initial term. If they do not, and they pass away during the initial term, the residence counts as part of the grantor’s taxable estate.
- During the initial term, the property’s retained interest is calculated. At the end of the term, assuming the grantor is still alive, the QPRT distributes the retained interest to named beneficiaries.
- Assuming the grantor outlives the initial term, at the end of the initial term the grantor has the right to rent out the property from the beneficiary, who now owns the property. The grantor can rent the property for the rest of their life if they wish. Furthermore, the beneficiary (who owns the property)cannot refuse rental, though the rent must be fair market value in order to qualify for tax purposes.
Qualified Personal Residence Trusts as Part of Medicaid Planning
Qualified personal residence trusts are not only for the very wealthy. Anyone, whether their estate is large or small, can take advantage of a QPRT to qualify for Medicaid, which pays for long term care like nursing homes. Because an individual cannot have assets worth more than $2,000 in order to qualify for Medicaid long term care benefits, they cannot own a home. A QPRT is a great workaround to this problem.
Call a Qualified Personal Residence Trust Attorney
For individuals wishing to lower their taxable estate or qualify for Medicaid by drastically decreasing their assets, a qualified personal residence trust may be part of the answer. To get you the rest of the way to your objective, the Strategic Counsel Law Group, L.C. is here to help. Contact one of our qualified personal residence trust attorneys today at 813-286-1700 to schedule a free consultation.
