Personal-residence Trust
Definition of "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
Coverage on data processing equipment, data processing media (such as magnetic tapes, disks), and extra expense involved in returning to usual business conditions. The data processing ...
Endorsement to an automobile insurance policy that protects an insured in either or both of two circumstances when driving a non owned car: business endorsement if the insured's negligent ...
Time during which an assessment life insurance company has the right to assess policyholders if losses are worse than anticipated in the premium charged. ...
Subsidiary, smaller company that is owned and controlled by a much larger company. In many instances pup companies are used to write special risk insurance for which the larger company does ...
Coverage on cargo in overseas ships for war-caused liability excluded under standard ocean marine insurance. Not covered is cargo awaiting shipment on a wharf, or on ships after 15 days of ...
Coverage during the operation of a ship for: Property of Ship (ship's hull, tackle, passenger fittings, equipment, stores, boats), and ordnance; Property Damage Liability (ship's owner ...
Same as term agent of record: individual who has a contractual agreement with a policyowner. The agent of record has a legal right to commissions from the insurance policy. ...
Statute in most states under which, if no evidence exists in a common disaster (when an insured and beneficiary die within a short time of each other in an accident for which determination ...
Rule that stipulates how to calculate the actual cash value of property that has been damaged, destroyed, or stolen. The thesis of this rule is that whatever evidence that can be produced ...
Have a question or comment?
We're here to help.