Personal-residence Trust
Trust in which a home is transferred directly to the children while the parent (s) remain in the home for a fixed period of time, resulting in a substantially reduced estate tax cost. These trusts have a great flexibility in that the home in trust may be sold during the term of the trust, provided the proceeds from the sale is reinvested in another home within two years of the sale of the home. The primary drawbacks of this trust are that if the parent (s) die before the term of the trust expires, the home is included in the estate of the parent (s), and if the parent (s) outlive the term of the trust and has a desire to remain in the home, the parent (s) must rent that home from the children at its fair market value.
During the term of the trust, the parent (s) has the right to the income from the trust's property as well as the use of that property. As such, income and expenses associated with that property are reported on the income tax return of the parent (s). If the parent (s) is still alive at the time the term of the trust expires, the interest in the home that is transferred to the children is valued as a remainder interest. The tax advantage results from this remainder interest as the remainder interest in the home is valued at a substantially lower value for federal tax purposes than the full market value of the home.
Popular Insurance Terms
Insurance companies that seek an economic advantage, thereby increasing their returns on equity by utilizing their specialized knowledge about a given line of insurance, territory, or risk ...
Bureau insurer that files its statistical and underwriting experience with a rating bureau. ...
pool that contains various reinsurance companies with each sharing reinsurance contracts on a pro rata basis as they are submitted to the pool. market that operates much like the New York ...
Same as term Elimination Period: form of deductible usually found in disability income insurance; for example, no benefits may be payable for a length of time beginning with the first day ...
Assets of an insurer that are due and payable in the current year but have yet to be received by the insurer. ...
Irrevocable trust into which the grantor places assets and receives in turn a fixed amount of income from a fixed annuity (amount of income stipulated at the time the trust is established) ...
Coverage primarily for the liability of an individual or organization that results from negligent acts and omissions, thereby causing bodily injury and/or property damage to a third party. ...
Excess coverage over the first layer of medical insurance to provide for catastrophic medical payments. The first layer may be either group or individual medical insurance, or an individual ...
Inquiry conducted by a committee of the legislature of the State of New York in 1905 that looked at abuses of life insurance companies operating in the state. This study led to stricter ...
Have a question or comment?
We're here to help.