WHAT IF I WANT TO SELL THE HOME TRANSFERRED TO THE QPRT AND MOVE TO ANOTHER HOME?

The initial trustee of the QPRT is normally the donor, the one who’s retained the right to live in the house. The question’s often asked, “Well, what if that house becomes too big, and they want to sell the house and move into something smaller? Can that be done?” The answer is yes. The trustee of the trust can sell the house, purchase a new house inside the QPRT. If they’re of equivalent value, we just continue with the term of the QPRT. Normally they’re not, and so there may be a new house and there may be some cash. Well, that cash converts into an annuity for the remaining term.

In the most extreme example, the client wishes to leave the house and move into a nursing home, or they don’t wish to move into a nursing home but they need to move into a nursing home, and the house gets sold. Well, the proceeds remain in the QPRT. The QPRT converts to a GRAT, a Grantor Retained Annuity Trust, and the annual value of that retained interest must be paid to the grantor of the trust and would probably help defray the nursing home costs. So yes, the house can be sold.

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.