Establishing a Qualified Personal Residence Trust (QPRT) involves transferring the residence to a trust that names the persons who are to receive the residence at the end of the stated term, usually a child or children of the donor. The donor is the tr
California Qualified Personnel Residence Trust (PRT) is a legal tool used in estate planning by residents of California to transfer ownership of their primary residence or vacation home to their heirs while minimizing estate tax liabilities. It allows individuals to retain the right to live in the property for a specified period, typically 10 or 15 years, after which it passes to the designated beneficiaries. By establishing a PRT, individuals can reduce the value of their taxable estate by removing the property's full market value from their estate. Here are different types of California Qualified Personnel Residence Trusts: 1. Regular PRT: This is the standard type of PRT that involves transferring ownership of the primary residence or vacation home into the trust with a defined term of ownership retention. 2. Granter Retained Income Trust (GRIT): A GRIT is a variation of the PRT where the individual transferring ownership retains the right to receive income from the property during the trust term. The retained income is usually a fixed percentage of the property's value. 3. Charitable Remainder Qualified Personnel Residence Trust (CRQ PRT): In this trust, a portion or the entire property is allocated to a charitable organization upon termination of the trust. The individual retains the right to reside in the property for a defined period, after which the charity receives the ownership. 4. Intentionally Defective Qualified Personnel Residence Trust (INPUT): This type of PRT is structured to be intentionally defective for income tax purposes. It enables the granter to transfer the property into the trust, reducing the taxable estate, while still being responsible for income taxes on the property during the trust term. 5. Multiple Parts: Individuals with more than one personal residence or vacation home can establish multiple Parts to take advantage of the tax benefits for each property separately. 6. Family PRT: This type of PRT considers multiple generations within a family, allowing for the inclusion of certain family members as the beneficiaries of the trust. It can help ensure the property remains in the family for an extended period. California Qualified Personnel Residence Trusts offer significant advantages for individuals looking to pass their residential properties to their heirs while minimizing estate taxes. However, it is crucial to consult an estate planning attorney or financial advisor to determine the most suitable type of PRT based on the individual's specific circumstances and goals.
