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.
Rhode Island Personal Residence Trust, also known as RI PRT, is a specialized legal arrangement allowing individuals to transfer ownership of their primary residence to a trust, while still retaining the right to reside in the property for a specific period. This estate planning tool helps Rhode Island residents protect their homes from potential future creditors and reduce the value of their assets for estate tax purposes. The primary purpose of a Rhode Island Personal Residence Trust is to remove the value of the individual's residence from their taxable estate, ultimately minimizing estate tax burdens. By transferring the property to the trust, the individual no longer owns it, and as a result, it is not included in their estate calculation upon death. This can provide substantial tax savings for heirs and beneficiaries. There are two common types of Rhode Island Personal Residence Trusts: 1. Granter Retained Interest Trust (GRIT): In a GRIT, the granter retains the right to reside in the property for a specific period, known as the retained term. Once this term ends, ownership of the property is fully transferred to the trust beneficiaries. Since the granter retains an interest in the property, a GRIT allows for a reduced value of the gift for tax purposes. 2. Qualified Personnel Residence Trust (PRT): Unlike a GRIT, a PRT allows the granter to retain the right to live in the property for a predetermined term, but at the end of the term, the granter can opt to continue residing in the property by leasing it from the trust. This type of trust enables the granter to maintain control over their primary residence while still benefiting from estate tax reduction. In both types of Rhode Island Personal Residence Trusts, the granter must outlive the retained term for the trust to be effective for tax purposes. If the granter passes away during the retained term, the property would be pulled back into their taxable estate, potentially subjecting it to estate taxes. It is important to note that establishing a Rhode Island Personal Residence Trust requires careful consideration and assistance from an experienced estate planning attorney. Every individual's circumstances and goals are unique, so seeking professional advice tailored to one's situation is crucial to ensure the trust is set up correctly and maximizes its intended benefits.Rhode Island Personal Residence Trust, also known as RI PRT, is a specialized legal arrangement allowing individuals to transfer ownership of their primary residence to a trust, while still retaining the right to reside in the property for a specific period. This estate planning tool helps Rhode Island residents protect their homes from potential future creditors and reduce the value of their assets for estate tax purposes. The primary purpose of a Rhode Island Personal Residence Trust is to remove the value of the individual's residence from their taxable estate, ultimately minimizing estate tax burdens. By transferring the property to the trust, the individual no longer owns it, and as a result, it is not included in their estate calculation upon death. This can provide substantial tax savings for heirs and beneficiaries. There are two common types of Rhode Island Personal Residence Trusts: 1. Granter Retained Interest Trust (GRIT): In a GRIT, the granter retains the right to reside in the property for a specific period, known as the retained term. Once this term ends, ownership of the property is fully transferred to the trust beneficiaries. Since the granter retains an interest in the property, a GRIT allows for a reduced value of the gift for tax purposes. 2. Qualified Personnel Residence Trust (PRT): Unlike a GRIT, a PRT allows the granter to retain the right to live in the property for a predetermined term, but at the end of the term, the granter can opt to continue residing in the property by leasing it from the trust. This type of trust enables the granter to maintain control over their primary residence while still benefiting from estate tax reduction. In both types of Rhode Island Personal Residence Trusts, the granter must outlive the retained term for the trust to be effective for tax purposes. If the granter passes away during the retained term, the property would be pulled back into their taxable estate, potentially subjecting it to estate taxes. It is important to note that establishing a Rhode Island Personal Residence Trust requires careful consideration and assistance from an experienced estate planning attorney. Every individual's circumstances and goals are unique, so seeking professional advice tailored to one's situation is crucial to ensure the trust is set up correctly and maximizes its intended benefits.
