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
Model state law of the NAIC that requires that the insurance policy contain language that meets a readability test (usually, the Flesch readability test that uses a formula approach to ...
Chart showing rate of death at each age in terms of number of deaths per thousand. ...
Expenses added to the beginning of a premium payment period. For example, an annuity with a 10% front load would include $10 of expenses for each $100 premium paid. ...
Type of guaranteed insurance contract in which the term is fixed, the rate is fixed, and the contract owner does not participate in the insurance company's earnings. ...
Historical mortality table that replaced the annuity table, 1949, used for the calculation of annuity rates with more-current mortality experience at that time. This table was subsequently ...
Liability insurance coverage for claims arising from acts that occurred before the beginning of the policy period. Policies written on a claims made basis, such as malpractice liability ...
Division of a sum of money between a deferred annuity and an immediate life annuity certain. ...
Exclusion in property insurance eliminating coverage for damage or destruction of property due to insects. ...
Capacity of parties to an insurance contract to understand the meanings of their action in order for the contract to be valid. ...
Have a question or comment?
We're here to help.