A family home or vacation property is often the most valuable asset in their estate. While the homeowner may want to leave their cherished property to children or other beneficiaries as an inheritance, taxes can quickly thwart well-meaning plans.
The sad truth is that without proper planning, most heirs simply cannot afford the tax bills that come along with inheriting valuable property, which will usually force the sale of a beloved family home or vacation property after the homeowner passes away.
Fortunately, there is a legal tool that can help homeowners safely and responsibly pass their property down to loved ones while significantly minimizing the taxes owed by beneficiaries after the owner’s passing.
A Qualified Personal Residence Trust (or QRPT) is an irrevocable trust established by the owner of a residence for the purpose of passing down real property to beneficiaries with greater financial protection and a minimized tax burden.
With the help of an experienced Santa Barbara trust attorney, ownership of the family property is transferred into the QRPT with the trust giving the parent (or “Grantor”) the right to occupy the property for a certain term of years. When that period ends, the ownership of the residence then passes to beneficiaries. Should the Parent/Grantor still wish to live in the property, he or she may “rent” the property from the beneficiaries at a fair market value.
A QRPT may be right for you and your family if:
There are many benefits of creating a QRPT for homeowners and future heirs alike, including:
If you would like to learn more about Qualified Personal Residence Trusts, or if you’d like to have your current QPRT reviewed by an experienced Santa Barbara trust attorney to make sure it still fits your needs, please contact our Santa Barbara law office at (805) 946-1550 to schedule an initial consultation.