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
Vehicle for the deferring of unneeded current income for a later date, such as retirement, providing the following benefits: There is no tax on earnings of the plan until distributed; ...
Act that provides new funding for the Bank Insurance Fund and enhances the safety and soundness of the financial system. The FDICIA includes the Foreign Bank Supervision Enhancement Act ...
Marketing of insurance through independent agents; also called independent agency system. Independent agents usually represent several insurance companies and try to insure the risk ...
Group of plans (to include section 401(k) plans and section 403(b) plans) that permit in-service withdrawals to fund a college education if a hardship exists. ...
Ordinary life insurance under which premiums are calculated so that the first few years of premiums are less than normal, and subsequent premiums are higher than normal. ...
Personal and family loss by death, disability, sickness, old age, accident, and unemployment. All of these exposures are insurable, and coverage's can be purchased under a variety of ...
Protection of the property of the business that is damaged or destroyed by perils such as fire, smoke, and vandalism; and/or if the actions (or nonactions) of the business' representatives ...
Document used in the transportation of goods that must be presented when a claim is made for a loss incurred. This document establishes the fact that the goods were under the care, custody, ...
Program enacted in 1965 under Title XVIII of the Social Security Amendments of 1965 to provide medical benefits to those 65 and over. The program has two parts: Part A, Hospital Insurance, ...
Have a question or comment?
We're here to help.