For many clients this higher exemption amount removes the need to put the asset in a QPRT
to get the discount and shrink the asset for gift tax purposes.
Accordingly, to reduce the value of the gift, the client would want to increase the actuarial value of his or her retained right to live in the residence by increasing the term of the QPRT
The grantor has a predetermined limit on the right to occupy the residence placed in trust and must relinquish ownership at the expiration of the QPRT
For example, a $3 million residence put into a 15-year QPRT
by somebody 55 years old would be valued at about $840,000 for tax purposes, while the same home placed in a 20-year QPRT
would be valued at only about $498,000.
1) The ruling is very helpful to planners who work with clients who funded QPRTs
and worry the clients may lose significant built-up tax benefits as a result of a change in owner upon the expiration of the QPRT
If the GRAT or QPRT
assets appreciate faster than the Sec.
If it is nevertheless desirable to use a QPRT
or GRAT for a dynasty trust, the GST exemption would be allocated at ETIP termination.
can be a valuable estate planning tool for clients who own a residence.
2036 could apply to a joint-purchase QPRT
(because the transaction might be characterized as a transfer with a retained lifetime income interest or right to beneficial enjoyment).
allows a grantor to transfer his primary residence into a trust while retaining the right to live in it for a specified number of years.
2702-5(b)(1) included a controversial provision requiring a QPRT
governing instrument to include language prohibiting "the trust from selling or transferring the residence, directly or indirectly, to the grantor, the grantor's spouse, or an entity controlled by the grantor or the grantor's spouse during the retained term interest of the trust, or at any time after the original duration of the term interest that the trust is a grantor trust.
In other words, if the Service feels that the repurchase of the residence from a QPRT
created before the governing instrument requirement creates too good a result for the grantor, it may nevertheless apply the governing instrument requirement retroactively.