In advising clients who have established a qualified personal residence trust (QPRT) and are contemplating the sale of a residence, estate planners must be mindful of the rules which apply if the residence is sold. While the current low-interest rates may not favor the establishment of a new QPRT to reduce federal estate taxation, other factors may stimulate the sale of the residence in an existing QPRT. In addition, wholesale changes in attitudes among certain clients with regard to vacation properties may prompt sales by QPRT trustees with the prospect of replacement properties of greater, lesser, or equal value held by the trusts. The unique requirements of the QPRT must be given due consideration when a property will be sold and a new plan for the trust is formed.
Author: Dennis C. Reardon, JD, LLM, CLU, ChFC, is the principal of Reardon & Associates, a law firm in Wayne, PA, where he specializes in tax matters related to estate, business, and compensation planning. He is a fellow of the American College of Trust and Estate Counsel and is a frequent speaker at professional meetings throughout the United States.
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