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
Amount of insurance coverage that an insurance company is willing to write on a given category of business. ...
Percentage of first year's premium paid to compensate an insurance agent. This is known as the "First Years" to show how much new business the agent is generating, compared with renewal ...
Modifications of the traditional defined benefit plan in which employees are credited with a specified percentage for each year of recognized service with the employer. Upon termination of ...
Type of proportional reinsurance under which the ceding company (primary insurer) cedes to a re-insurer its net amount at risk for the amount above its retention limit on a life insurance ...
Buy or sell order for security that expires at the end of the trading date on which it was entered if not executed. ...
Policy owner rights under a life insurance policy, including the right to name a new beneficiary at any time and to surrender the policy for its cash value. ...
unlawful application of force to another's person; physical striking of another without permission. ...
Insurance issued to a creditor (lender) to cover the life of a debtor (borrower) for an outstanding loan. If the debtor dies prior to repayment of the debt, the policy will pay off the ...
Over a long period of time, the average loss an individual, individuals, or an organization can expect to incur from a particular exposure. ...
Have a question or comment?
We're here to help.