Qualified Personal Residence Trust (qprt)
Definition of "Qualified personal residence trust (qprt)"
Trust instrument that permits the owner of a residence (grantor) to transfer ownership of that residence with the grantor still being allowed to stay in that residence for a stipulated period of time on a tax advantage basis. The procedure in establishing such a trust would be for: the grantor to establish an irrevocable trust that would allow the grantor to stay in that residence for a given period of time (for example 15, 20, or 30 years); and the grantor to contribute the residence to the trust. At the end of that given time period, the residence will then be transferred to the beneficiary (s) of the trust as selected by the grantor at the inception of the trust. The tax rules value the residence that transfers to the beneficiary (s) of the trust at a substantial discount from the actual value of the residence on the date the grantor contributed it to the trust. The disadvantages of the QPRT include the following: at the end of the given period of time, the grantor can no longer stay in the residence and the beneficiary (s) own the residence outright; and if the grantor dies before the expiration of the QPRT, the residence's actual value on the day it was contributed to the trust is included in the grantor's estate and thus becomes subject to FEDERAL ESTATE TAX. For example, a father retains, for a given time period, the right to use and possess the home. At the end of that time, the home's ownership reverts to the children but the father can continue to live in the home. If the father dies during the given time period, the home is taxed at full value as part of the father's estate. The life insurance policy previously purchased with the children as the beneficiary will override the lost estate tax savings because of the death of the father within that term period.
Popular Insurance Terms
Investment risk associated with the psychology of the market in that emotions affect the price of a company's stock that, in most instances, has nothing to do with the current or potential ...
Health insurance coverage for eye examinations, and eyeglass or contact lens prescriptions. ...
Average earned monthly income of the insured wage earner after regular earned income has been interrupted or terminated because of illness, sickness, or accident. This income amount is ...
Procedure for offering reduced auto insurance rates to drivers with good records, and imposing higher rates on bad drivers. Typically, premiums are weighted under a system that assigns ...
Mathematical combination of one-year term insurance and one-year deferred permanent insurance such that no reserve has to be set up for the first year the policy is in force and allowance ...
Legal power of the commissioner of Internal Revenue to approve any classification of employees that does not discriminate in favor of a prohibited group. Such approval is necessary before a ...
Means of funding permitted under the employee retirement income security act of 1974 (ERISA). The administrator of a pension plan can comply with required minimum funding standards by ...
Contract providing a monthly income benefit to members of a group of employees. A group annuity has the same characteristics as an individual annuity, except that it is underwritten on a ...
Classification of occupations according to the degree of risk inherent in that occupation. ...
Have a question or comment?
We're here to help.