Personal-residence Trust
Trust in which a home is transferred directly to the children while the parent (s) remain in the home for a fixed period of time, resulting in a substantially reduced estate tax cost. These trusts have a great flexibility in that the home in trust may be sold during the term of the trust, provided the proceeds from the sale is reinvested in another home within two years of the sale of the home. The primary drawbacks of this trust are that if the parent (s) die before the term of the trust expires, the home is included in the estate of the parent (s), and if the parent (s) outlive the term of the trust and has a desire to remain in the home, the parent (s) must rent that home from the children at its fair market value.
During the term of the trust, the parent (s) has the right to the income from the trust's property as well as the use of that property. As such, income and expenses associated with that property are reported on the income tax return of the parent (s). If the parent (s) is still alive at the time the term of the trust expires, the interest in the home that is transferred to the children is valued as a remainder interest. The tax advantage results from this remainder interest as the remainder interest in the home is valued at a substantially lower value for federal tax purposes than the full market value of the home.
Popular Insurance Terms
Policy that combines life insurance coverage on two lives and pays policy proceeds on the second person's death with the accumulation potential of an underlying variable investment ...
Total amount of insurance on an insurer's books at a particular time. ...
Special policy blank issued by an insured for individual shipments or other purposes under an open policy. The open policy allows an insured to buy protection for all marine business for an ...
A procedure in which the employer has absolute liability for the injuries incurred by the employee and the employee does not have the right to sue the employer for those injuries suffered. ...
Coverage through an endorsement to the glass insurance policy on an all risks basis, subject to the exclusions of wear and tear, and damage caused by nuclear hazard, war, and electricity. ...
Academic publication of the American risk and insurance association in which articles deal with aspects of risk, insurance, and allied fields of study. ...
Protection under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of ...
Form whose purpose it is to help the agent and the prospective policyowner judge the validity of the insurance company's policy illustrations. This questionnaire's focus is on the ...
Percentage of income required by a retiree to maintain a desired standard of living during the retirement years. ...
Have a question or comment?
We're here to help.