Qualified Personal Residence Trusts
How Trusts Work in Los Angeles, CA
A qualified personal residence trust (QPRT) is a type of irrevocable trust which is uniquely designed to remove the value from your taxable estate by holding and owning the primary or secondary residence. A Los Angeles qualified personal residence trust lawyer from the Law Offices of David A. Shapiro, P.C. can help you understand the benefits of this type of trust and whether it is right for you. It is for the removal of the value of a primary or secondary residence involved in your estate. This is accomplished at a reduced gift tax value and can remove the value of the property of your estate for tax purposes. Speak with a Los Angeles trust lawyer today to learn more.
How to Create Your Trust
If you believe that a qualified personal residence trust is right for you, it is important to understand the process and how it should be accomplished. The first step is to write the irrevocable trust agreement. Your first decision that must be made will be who will serve as the initial and successor trustees. You will also need to decide how long you want to have the right to live in the residence before it is given to the beneficiaries and who those beneficiaries will be. This is an irrevocable trust, meaning that it is difficult to change; therefore, you will want to ensure that you choose wisely.
You will then have to fund the trust with your residence by transferring the ownership of your residence into the name on the trust. Next, you will need to obtain an appraisal of the residence. You will then need to file a Form 709, United States Gift, through which you will report your gift to the IRS. After the retained income period has come to an end, you will need to take two actions. You will need to transfer ownership of the residence to your beneficiaries and pay the fair market rent if you continue to live in the residence. If you would like more information on a QPRT, contact our firm today!