Clients of means can benefit significantly from a Qualified Personal Resident Trust (QPRT), but your firm needs to set up this valuable estate planning tool accurately and correctly. A QPRT can reduce your client’s taxable estate, but if your client lives beyond the initial trust term, all sorts of concerns arise. Wealth Docx® QPRT software ensures potential mistakes don’t occur.
QPRT Challenges for Attorneys
QPRTs tend to be complex, because grantor’s lives often become surprisingly complicated. Here are a few tricky situations that can throw even experienced estate planning attorneys for a loop:
- The QPRT term is up, and your client still wants to live in the house. While he can still live there and pay fair market rent, who exactly are the lessors? This situation opens up various tax and legal issues, especially if the client has more than one child. If the donor doesn’t pay fair market rent, the residence may be included in the donor’s estate.
- The client wants to terminate the QPRT, although it is an irrevocable trust. Are there terms in the document allowing the donor to receive a QPRT distribution?
- The client wants to sell or refinance the residence. In the first instance, the purchase price of a new residence – whether greater or less than the original – creates tax issues. In the second instance, the lender may not understand the legalities of a QPRT, and complex issues arise.
Between the inherently convoluted nature of QPRT law and a client’s inability to understand what they can or cannot do with the property, errors are frequently made.
Getting It Right with Wealth Docx
Life would be so much easier if we could predict the future. That’s not possible, but Wealth Docx software allows you to see what the future holds for a client and a QPRT under diverse circumstances. Since so many situations may play out with a QPRT, Wealth Docx gives you the ability to model tax and estate benefits under various scenarios. Your client can then understand the ramifications for each event. Wealth Docx QPRT software includes ancillary documents, such as trustee removal and replacement. When your practice uses Wealth Docx to set up QPRTs, you can have much more confidence in your documents.
