Estate Planning · Haute Lawyer Network
What Is a Qualified Personal Residence Trust (QPRT)?
Last reviewed: June 2026
A Qualified Personal Residence Trust (QPRT) is an irrevocable trust to which the grantor transfers their primary residence or vacation home, retaining the right to live in the residence for a specified term — typically 5-15 years. After the term expires, ownership passes to the trust's remainder beneficiaries — typically children — while the grantor can continue living there only by paying fair market rent. The gift tax value of the residence is significantly reduced because the grantor is retaining a valuable interest — the right to live there for the trust term — and the IRS uses actuarial tables to value only the remainder interest (what the children ultimately receive) for gift tax purposes. A home worth $2 million transferred to a QPRT with a 10-year term might have a taxable gift value of $1 million or less — removing significant value from the taxable estate at reduced gift tax cost.
Frequently Asked Questions
What happens if the grantor dies before the QPRT term expires?
The home is included back in the grantor's taxable estate — as if the QPRT was never created. The QPRT term should be set based on the grantor's health and life expectancy.
What is the optimal QPRT term?
Long enough to produce a significant valuation discount but short enough that the grantor is likely to survive it. The discount increases with longer terms, but so does the mortality risk.
Can the grantor remain in the home after the trust term expires?
Yes, by paying fair market rent to the remainder beneficiaries (children). This rent payment is an additional transfer of wealth from the grantor to the children that is not subject to gift tax — a hidden advantage of QPRTs.
What happens to the property tax assessment when the home is transferred?
Depends on state law. Many states have reassessment rules that could increase property taxes on the transfer to the children, though some have parent-child exclusions from reassessment.
Can a vacation home be placed in a QPRT?
Yes. One QPRT for the primary residence and a second for a vacation home are common strategies. The grantor can retain the right to use each property for the specified term.
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