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
Nominal interest rate minus the rate of inflation. ...
Basic employee benefit under which an employer buys a master policy and issues certificates to employees denoting participation in the plan. Group life is also available through unions and ...
Section of a policy that specifies the dollar amount or percentage of any loss that the insurance does not pay. Most property and medical policies specify that the first portion of any loss ...
Same as term Unallocated Funding Instrument: pension funding agreement under which funds paid into a retirement plan are not currently allocated to purchase retirement benefits. The funds ...
Bonds that are secured by mortgage securities classified as either interest only or principal only strips (separate trading of registered interest and principal of securities). Insurance ...
Trust in which rights to make any changes therein are surrendered permanently by the grantor. The grantor uses this type of trust to transfer assets and any potential depreciation out of ...
Clause added to an insurance policy providing waiver of premium (WP) if the premium payer dies or becomes disabled. For example, this option is available on insurance policies on a child's ...
Same as term Civil damages Awarded: sums payable to the winning plaintiff by the losing defendant in a court of law; can take any or all of these forms: general, punitive, and special. ...
Same as term Bankers Blanket Bond: coverage for a bank in the event of loss due to dishonest acts of its employees or individuals external to the bank. For example, if a teller goes to ...
Have a question or comment?
We're here to help.