Family Office Definition: Qualified Personal Residence Trust
Qualified Personal Residence Trust definition: (QPRT) transfers your residence to beneficiaries at your death or after a specified number of years. The residence is held by an irrevocable trust with children or other heirs as the beneficiaries. The grantor may occupy the home until the trust expires, at which point in time it transfers to the beneficiaries. If the grantor dies before the trust expires, the value of the home is included in the estate and subject to estate taxes. However, the value of the home is not subject to estate taxes as long as the grantor dies after the trust expires. QPRTs are irrevocable. Gift taxes may apply on the beneficiaries remainder interest in the property at the time the trust is established. When the beneficiaries sell the property, their cost basis is not “stepped up” as it is with inherited property (making capital gains tax a possibility on appreciated property).
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