Qualified personal residence trusts ("QPRT"s) have been an extremely useful estate planning tool for years. But now in 2011 and 2012, it is a particularly good time for QPRTs. Why? Three reasons:
(1) there is a new gift tax exemption available in the amount of $5M when it was previously only $1M. This allows much more gifting to take place.
(2) there is a potential valuation discount available for an undivided interest in real estate as set forth in Ludwick, TCM 2010-104 which allowed a 17% discount for lack of marketability and lack of control.
(3) the current depressed housing market has made QPRTs a very viable method because the lower the current value, the less the amount of gift tax exemption that needs to be used.
(1) there is a new gift tax exemption available in the amount of $5M when it was previously only $1M. This allows much more gifting to take place.
(2) there is a potential valuation discount available for an undivided interest in real estate as set forth in Ludwick, TCM 2010-104 which allowed a 17% discount for lack of marketability and lack of control.
(3) the current depressed housing market has made QPRTs a very viable method because the lower the current value, the less the amount of gift tax exemption that needs to be used.
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