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
Federal agency that regulates commerce across state lines. The ICC does not oversee insurance, which is subject to regulation by the states according to Public Law 15, McCarran-Ferguson ...
Sum of money paid on the principal amount of money invested or loaned. ...
Legislation mandating that factors taken into account in the calculation of premium rates for automobile insurance include the insured's driving record, annual miles driven, and years of ...
Endorsement to personal automobile policy (PAP) that covers an insured involved in a collision with a driver who does not have liability insurance. ...
fee that is the most consistently charged by the physician for a particular procedure. fee that is usual for a particular procedure charged by the majority of physicians with similar ...
Term referring to the most common charge, in health insurance, for a service. ...
Employee benefit plan that allows the employee to choose among several different benefits offered by the employer. In essence, the employee is provided with the opportunity to make a ...
Means used by a direct fire underwriter to protect against accumulation for a fire account, as well as against extremely large fire account liability. For example, heavy liabilities under ...
Unfunded trust that acts as the owner of a life insurance policy. The trust receives a donor's cash payments on a periodic basis, from which the beneficiary of the trust has a specified ...
Have a question or comment?
We're here to help.