When you are considering options for estate planning, you will discover there are many different types of estate planning tools you may utilize to protect your family and your property. However, some of the tools may benefit you more than other tools because of your unique financial and family situation. For example, some people find that using an irrevocable living trust provides more benefits than a revocable living trust even though they do not retain control over the assets in an irrevocable trust. Our Gainesville probate attorney can help you choose the best options for estate planning based on your situation and your goals.
One tool that many people may not be aware of is a Qualified Personal Resident Trust (QPRT). A QPRT offers several advantages for reducing estate and gift taxes for your personal residence or vacation home. With property values in Florida increasing each year, a QPRT may be extremely useful in reducing the value of your gross estate for tax purposes. Call our Gainesville probate lawyer at (352) 450-1367 to discuss a QPRT and other estate planning tools during a free consultation.
What is a Qualified Personal Residence Trust?
A Qualified Personal Residence Trust (QPRT) may be used to hold title to your Florida residence or vacation home. As stated above, a QPRT can reduce the gross taxable value of your probate estate while protecting the real estate for your children or other heirs.
However, as with other estate planning tools, there are pros and cons associated with using a QPRT to hold title to your home or vacation home. Before you transfer title to your residence to the QPRT, we urge you to discuss this trust agreement with an experienced Gainesville estate planning attorney.
Some of the things that you need to consider before executing a QPRT include:
- You May Lower Your Estate Taxes — The QPRT allows you to lower the gross value of your probate estate, which lowers the amount of estate taxes your heirs may owe after your death. For individuals with substantial wealth, this tool can be of great value when used properly.
- You Can Continue to Live in Your Home —As part of the trust agreement, you can continue to live in your home for a certain number of years after you create the QPRT. At the end of the specified number of years or upon your death, the beneficiaries receive title to the real estate.
- You May Be Required to Pay Rent — If you outlive the term of the trust, you must pay rent at market value if you intend to remain in the home.
- You Can Sell Your Home — Even though the trust holds the title to the home, you may sell your home. However, the proceeds of the sale must be used to purchase a new home in the trust name,or the proceeds must be placed in an annuity for the benefit of the grantor.
- Longer Terms Equal Greater Savings — The beneficiaries of a QPRT inherit the home at a lower tax rate. By extending the term of the trust, your heirs can realize greater savings.
- Dying Before the End of the Term is a Substantial Disadvantage — If you die before the end of the QPRT's term, the home is included in your probate estate. Because the home passes through your probate estate instead of directly to your heirs, you lose the advantage of reducing the taxable value of your estate.
Because each person's situation is different, there could be additional advantages and disadvantages of using a QPRT for your home. You need to discuss your options carefully with an experienced Gainesville probate attorney before proceeding with a QualifiedPersonal Residence Trust.
Call Our Gainesville Law Firm for More Information and a Free Appointment
It can be overwhelming trying to decide how to structure your estate plan in a way that provides the maximum protection for your heirs and your property. Our Gainesville probate attorney can help you choose the tools and options that are best for you and your family. A comprehensive estate plan can protect your property, and it can give you peace of mind that your loved ones will be provided for after your death.
Call The Law Offices of Justin McMurray, P.A. at (352) 450-1367 or use the contact form above to request your free consultation with our Gainesville estate planning attorney.