Q:

What can I do if I still want to live in my home at the end of the QPRT trust term?

A:

Negotiated lease with the new owners. At the end of the term, the house now belongs to the beneficiaries of the trust or the trust run by a trustee on behalf of those beneficiaries.

In order for the donor to remain in the house, they have to pay fair rental value based upon current fair market rent at that time. That cannot be negotiated in advance. It has to be negotiated at that time. And the best thing to do then would be to enter into a lease agreement so that there’s security for both the donor remaining and for the new owners of the house to receive our rental income from the donor.

Note: The Tax Cut and Jobs Act of 2017 signed into law in December 2017 increased the exemption amounts mentioned in these videos. The personal estate, gift, and generation-skipping tax lifetime exemption was increased to $11.18 million per person. The annual gift tax exclusion was increased to $15,000 per donee per year.

Both amounts are indexed for inflation and may increase year over year until December 31, 2025, when the law sunsets and reverts to 2017 values.