Residents of Colorado may be curious about the options available that can prevent a family home from going into probate. Among the many trusts available for estate planning, one type is specifically designed to both reduce the estate's value and provide a partial shield against the gift tax. The qualified person resident trust protects against home appreciation and provides a method for the early transfer of assets to beneficiaries.
Though not as common due to exemption increases, QPRTs still offer a number of benefits. The owner of the home transfers the property into the trust after an appraisal. The value of the home at the time of transfer becomes the taxable gift. This is called the carryover basis. For comparison, a home transferred at death would be appraised at that later time, which would include any possible appreciation of the home for tax purposes.
A home transferred at death would also increase the total value of the estate. QPRTs remove this value. They can remove even more from the estate as well. The owner of the home sets a trust period, which is the amount of time before the home transfers to beneficiaries. During this fixed period, the benefactor can maintain residence. After the period ends, the owner can pay fair market rent to the beneficiaries.
Colorado residents looking to reduce their taxable estate or keep a property in a family over multiple generations may want to investigate QPRTs and other types of trusts. Both revocable and irrevocable trusts can offer the means of maximizing estate value for heirs and meeting long-term goals. An experienced attorney may be able to help with the tasks of estate planning.