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
Coverage on an all risks basis for loss due to theft or mysterious disappearance of personal property; damage to premises and property within resulting from theft; and vandalism and ...
Insurance policy that differs from the standard form. ...
Coverage protecting future profits to be earned from a manufacturer's inventory. A manufacturer may lose all or part of an inventory of finished goods due to a peril such as fire and still ...
Provision that holds a re-insurer liable for its share of losses even if the ceding company becomes insolvent before paying these losses. For example, XYZ Insurance Co. writes a fire policy ...
Arrangement between the seller and the buyer in which the buyer has the right to buy (call option) or sell (put option) a security at some time in the future at a price stipulated at ...
Physical contact of an automobile with another inanimate object resulting in damage to the insured car. Insurance coverage is available to provide protection against this occurrence. ...
Type of employee savings plan under which an employee may contribute up to a specified percentage of the salary on an after-tax basis and the employer matches the employee's contribution up ...
Delivered insurance policy to the policyholder in which the policy's first premium has been paid, the application has been reviewed, and all policy parts completed. ...
Requirement that income payments must begin from tax-deferred saving programs by April 1 of the calendar year after the calendar year in which the plan participant becomes age 7014 or ...
Have a question or comment?
We're here to help.