Developing a Qualified Personal Residence Trust with a San Francisco Peninsula Estate Planning Lawyer

Most people recognize that San Francisco Peninsula estate planning lawyers work hard to protect their clients’ assets to maximize an estate after the individual’s death, but this is really only one aspect of the job. Estate planning lawyers help families and individuals to plan for their own futures with retirement planning, help with investment strategies to increase personal wealth, and provide legal advice on lowering the amount of taxes their clients are required to pay.

A Qualified Personal Residence Trust is a tool that can play into each of these concerns. Often referred to as a QPRT, this allows a client to transfer ownership of a personal residence to his or her children while retaining the right to live in the home rent-free for an agreed upon period of time. The parent pretty much has free rein over the house, but it legally belongs to the children.

Estate planning lawyers in San Francisco Peninsula might suggest this option to clients who are seeking ways to lower the value of their taxable estate. When the parent passes away (after the trust term is over), the home isn’t subject to estate taxes because it has already been passed to the children. It can be a pretty great deal, especially since it also affects gift taxes positively, with less taxes owed overall due to the decreased value of real estate that comes with the stipulation that someone else can live there without paying rent.

While the parents are in residence, they are responsible for upkeep of the property. These things can get a little complicated, but a good San Francisco Peninsula estate planning lawyer will be able to thoroughly discuss the advantages and disadvantages of a QPRT.

Speaking of disadvantages, there are some to consider. For example, if the property appreciates in value, there may be capital gains taxes for the children to pay. Additionally, the trust won’t lower the taxable estate value if the parent passes away before the agreed-upon term has expired.

As mentioned, the QPRT is a tool that an estate planning lawyer may suggest in order to fulfill multiple needs: planning for retirement, lowering taxes, investing, etc. It’s not the right choice for every family situation, but it is something worth considering with your San Francisco Peninsula lawyer.

If you are interested in learning more about QPRTs and other estate planning strategies, please contact us at (650) 422-3313 or gary@braininlaw.com to set up a consultation.