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
Combination life insurance policy consisting of ordinary life and double the amount of term life. Should the insured die within a stipulated time period, the double term amount and ordinary ...
Limiting provision. Exclusions listed in group health plans include: benefits under Workers Compensation; certain dental procedures; convalescent or rest cures; medical expenses resulting ...
Specified amount received by an insured at the end of an endowment period (usually the face amount of the endowment policy), or by the owner of an ordinary life policy (usually the ...
Section of an insurance company that sells through brokers. Some brokerage departments are self-contained in that they have their own underwriting and marketing staffs. Brokerage ...
Life insurance company whose agents sell ordinary life insurance and industrial life insurance. ...
Special type of charitable remainder trust (CRT) under which a designated beneficiary (cannot be a charitable beneficiary) receives an annual fixed income. The grantor of the trust is ...
Insurance that grew out of the urban demonstrations and riots of the 1960s. Because of the deteriorated social and economic circumstances in these areas, it became impossible for many ...
Investment strategy that advocates the transfer of amounts from one category of investment to another category according to a perception of how each of these categories of investments will ...
Provision in most property insurance policies that permits a policyholder to use the insured premises to store materials and handle them in the manner needed to pursue his or her line of ...
Have a question or comment?
We're here to help.