What Is A Florida Qualified Personal Residence Trust?

Magda and Russell own a large, expansive home near Lake Denham. They are starting to look into long-term planning and think it might be time to downsize and rent a smaller apartment with less to maintain, but they want the home to remain in the family. After all, so many wonderful memories were shared there. Would a Qualified Personal Residence Trust allow the couple to remain in the home without adding to the estate tax rate when they pass? 

What is a QPRT? 

A qualified personal residence trust, or QPRT, is a specific estate planning tool designed to remove the settlor’s(person creating the trust) largest asset from their estate. It transfers ownership of the home to a named beneficiary while the settlor is still living, while granting the settlor the option to continue residing in the home.  Fla. Stat. §732.4017. Contrary to popular belief, a qualified personal residence trust can be utilized for the primary home or a secondary vacation home. Because a residence is often a good majority of a person’s net worth, removing the home from the person’s list of assets can dramatically reduce the size of their taxable estate.

How Does it Work?

To create a QPRT, the settlor must establish the irrevocable trust, name beneficiaries and name a trustee and substitute trustee. A trustee is the person delegated to administer the trust, file an accounting with the court and oversee distributions. Because a QPRT only holds real estate, there is nothing to distribute but maintenance of the home may fall under the trustee’s purview. Documentation must be prepared to convey ownership of the property from the settlor to the trust, naming a beneficiary to take possession and ownership of the home after a specific period of time. One caveat is that if the original owner(settlor) passes away during the trust period, the home reverts back to the settlor’s estate and may be entered into probate administration. Higher estate tax exemptions may make QPRT’s less attractive in the long run, and you should not enter into a trust, revocable or irrevocable, without discussing your options with a qualified estate planning attorney first. 

Contact The Villages Trusts & Estate Attorneys at Millhorn Elder Law Planning Group 

If you are just starting to contemplate estate planning for your family, or you need help revising a revocable trust, our estate planning attorneys at Millhorn Elder Law Planning Group are standing by. We know that navigating the estate planning process can be tedious and confusing, and we make it our mission to help clients gain clarity and confidence in their estate plan. Call today to schedule a comprehensive consultation.

Source:

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0732/Sections/0732.4017.html