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Estate News --- Observations of a Trust and Probate Attorney

Wednesday, July 13, 2016

What is a Qualified Personal Residence Trust?

Developing a Qualified Personal Residence Trust with an Ontario Estate Planning Lawyer

Most people recognize that Ontario estate planning lawyers work hard to protect their clients’ assets to maximize an estate after the individual’s death, but this is really only one aspect of the job. Estate planning lawyers help families and individuals to plan for their own futures with retirement planning, help with investment strategies to increase personal wealth, and provide legal advice on lowering the amount of taxes their clients are required to pay.

A Qualified Personal Residence Trust is a tool that can play into each of these concerns. Often referred to as a QPRT, this allows a client to transfer ownership of a personal residence to his or her children while retaining the right to live in the home rent-free for an agreed upon period of time. The parent pretty much has free-rein over the house, but it legally belongs to the children.

Estate planning lawyers in Ontario might suggest this option to clients who are seeking ways to lower the value of their taxable estate. When the parent passes away, the home isn’t subject to estate taxes because the trust is not considered a part of the taxable estate. It can be a pretty great deal, especially since it also affects gift taxes positively, with fewer taxes owed overall due to the decreased value of real estate that comes with the stipulation that someone else can live there without paying rent.

While the parents are in residence, they are responsible for upkeep of the property. Whether it’s regular maintenance, remodeling, or real estate taxes, the beneficiaries of the trust are off the hook during the time the parents remain in the home. Money paid for these purposes is considered to be a gift to the trust. These things can get a little complicated, but a good Inland Empire estate planning lawyer will be able to thoroughly discuss the advantages and disadvantages of a QPRT.

Speaking of disadvantages, there are some to consider. For example, if the property appreciates in value, there may be capital gains taxes for the children to pay. Additionally, the trust won’t lower the taxable estate value if the parent passes away before the agreed upon term has expired.

As mentioned, the QPRT is a tool that an estate planning lawyer may suggest in order to fulfill multiple needs: planning for retirement, lowering taxes, investing, etc. It’s not the right choice for every family situation, but it is something worth considering with your Ontario lawyer.

If you are interested in learning more about QPRTs and other estate planning strategies, please contact us at 989-985-5522 or bha@bristolhaynes.com to set up a complimentary strategy session.


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Brock, Robinson & Associates assists clients with Estate Planning, Wills, Trusts, Special Needs Planning, Pet Trusts, Probate & Estate Administration, and Family Business Preservation in Chino, California as well as Chino Hills, Inland Empire, Pomona, Rancho Cucamonga, Ontario, Montclair, Diamond Bar, West Covina, Covina, Glendora, San Dimas, La Verne, Claremont Fontana, Riverside, Colton, Corona, San Bernardino, Redlands, Orange, Brea, Yorba Linda, Fullerton, Hacienda Heights, Eastvale, Norco, Mira Loma, Alta Loma, Upland, Rialto, Highland, Loma Linda and Grand Terrace in San Bernardino County, Los Angeles County and Orange County.



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