Personal residence trusts are used to transfer a grantors residence out of the grantors estate at a low gift tax value. Once the trust is funded with the grantors residence, the residence and any future appreciation of the residence is excluded from grantors estate. This type of trust is an irrevocable split interest trusts. The transfer of the residence to the trust constitutes a completed gift. The split interest character of the trust is as follows: the grantor retains the right to live in the house for a number of years, rent free, and then the remainder beneficiaries of the trust become fully vested in their interest.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
A Florida Personal Residence Trust (PRT) is a legal tool used for estate planning purposes. It allows individuals or families to transfer their personal residence into a trust while retaining the right to live in the property for a specified period. This trust arrangement provides potential benefits in terms of reducing estate taxes, protecting the residence from creditors, and ensuring a smooth transfer of ownership upon the death of the granter. The primary aim of establishing a Florida Personal Residence Trust is to minimize estate tax liability by removing the value of the personal residence from the granter's taxable estate. By doing so, the granter can potentially reduce estate taxes payable upon their death. This tax reduction strategy can be particularly beneficial in high-net-worth scenarios. There are different types of Florida Personal Residence Trusts available to suit various estate planning needs: 1. Qualified Personnel Residence Trust (PRT): A PRT offers significant estate tax benefits. The granter transfers their residence to the trust while retaining the right to reside in it for a fixed term, typically between 10 and 20 years. After this duration, the property passes to the beneficiaries free of estate taxes. However, if the granter passes away before the end of the trust term, the property will be included in their taxable estate. 2. Non-Grantor Personal Residence Trust (NG PRT): An NG PRT transfers the primary residence into an irrevocable trust, removing it from the granter's taxable estate. Unlike PRT, the granter forfeits the right to live in the property during the trust term. However, they can still effectively control the trust by being a trustee or retaining certain powers over the trust. 3. Spousal Lifetime Access Trust (SLAT): A SLAT allows a married couple to create a trust where one spouse transfers their residential property while allowing the other spouse to reside in it for life. This type of trust is often used to minimize estate taxes while still providing for the surviving spouse's housing needs. 4. Charitable Remainder Personal Residence Trust (CR PRT): This type of trust allows the granter to transfer their personal residence to a trust for the benefit of a charitable organization. The granter retains the right to use the property for a specified period, usually their lifetime or a fixed number of years. Upon the termination of the trust, the charity receives the property, and the granter can claim a charitable deduction for income tax purposes. In conclusion, a Florida Personal Residence Trust offers a range of benefits, including estate tax reduction, asset protection, and control over the transfer of a personal residence. Understanding the various types of trusts available can help individuals and families make informed decisions based on their unique estate planning objectives.
