While most Missouri residents don’t have to worry about federal estate taxes upon their death, it is possible that future changes to estate tax laws could lower exemption levels. Therefore, it may be a good idea to look into estate planning tools such as the qualified personal residence trust. A QPRT allows people to gift their primary or secondary home at a predetermined future date.
The homeowner can make the gift while using the home’s current value as the basis for estate tax calculations. This may reduce or even eliminate the need to pay such taxes upon that person’s death. Creating the trust is relatively simple as it involves putting the deed to the house into the trust’s name. The former owner is allowed to live there for free for the term of the trust. However, once the term expires, he or she must pay rent to continue living in the home.
Once the term of the trust expires, the house is transferred to a beneficiary such as a child or grandchild. It is important to note that the trust is generally only beneficial if the property owner lives long enough to transfer it. If the owner dies before the trust expires, the house is once again part of the estate and at its market value when he or she passes away.
Those who are interested in transferring property to children or others upon their death may wish to talk to an estate planning attorney. In addition to creating a legacy, an individual may be able to limit or eliminate estate taxes by gifting property prior to death. An attorney may help an individual create a QPRT or any other type of trust that may meet his or her current and future estate planning needs.