Protect Your Residence With a Personal Residence Trust
Even in today's depressed real estate market, your home may still be among your largest assets. How do you protect its value for the next generation in your estate plan? The attorneys of The Law Offices of Hugh Janow, LLC, in Pearl River, New York, can review your situation and offer a plan that fits your needs.
Avoiding the Sale of the Residence to Pay Estate Taxes
For clients with large estates, it often makes sense to transfer ownership of the home to a qualified personal residence trust or QPRT in order to avoid large estate and gift tax liability. A qualified personal residence trust allows you to pass ownership of your home to the next generation without forcing your heirs to sell the home in order to pay the estate taxes on it.
In exchange for transferring the asset to the trust, you will retain use of the house for a specified number of years—perhaps 10 or 15 years. During that time, you live in the house, make mortgage payments, keep up the property and pay real estate taxes as usual. After the time period elapses, your heirs own the home. They will pay gift taxes at a significantly reduced level than if the home had been given to them outright or through direct inheritance.
After the Term Is Up
You can continue to live in the home, renting it from your heirs. They may choose to sell the home after your death. If they do, they will pay 15 percent income tax on the proceeds of the sale rather than 50 percent in estate taxes. Both primary homes and vacation homes can be transferred through a QPRT.
Contact The Law Offices of Hugh Janow, LLC, Today
Trusts are extremely complex and they are not the right choice for every situation. To determine whether a qualified personal residence trust or another option makes sense for you, please contact the tax and estate planning lawyers at The Law Offices of Hugh Janow, LLC. Call 845-735-8385 to arrange an appointment.
