A Qualified Personal Residence Trust, or QPRT, is a potentially powerful tool for savings on transfer taxes and asset protection for a residence as part of an estate with a significant value. Essentially, it is a way to keep the value of a residence out of your overall estate to avoid later estate and gift taxes to your beneficiaries. This may be a primary residence, or perhaps a vacation home. Using a QPRT, a residence is passed into a specialized Trust while allowing you to continue living there. After a set term, the property ownership is passed to the Beneficiaries.
Importantly, a QPRT allows you to calculate the property using a beneficial gift tax rate instead of paying transfer taxes—which could translate to a pretty large tax saving. In addition, if you pass away after the expiration of the Trust term, the property has already passed to the Beneficiaries, so no additional estate tax is due. Note that a California Qualified Personal Residence Trust is irrevocable, so only in rare cases can you undo a QPRT, and the benefit is highly dependent on specific circumstances—seek the services of a great California Estate Planning lawyer firm for your QPRT in CA!