Qualified Personal Residence Trust (QPRT)

A qualified personal residence trust (QPRT) is a special form of irrevocable trust that an individual funds with his or her personal residence.  During the trust term, typically the donor's lifetime, the donor may continue to live in the residence. When the trust terminates, ownership of the residence passes to heirs named by the donor in the trust instrument.

The donor of a QPRT receives a gift tax deduction for the value of the donor's retained interest. The difference between the value of the donor's interest and the value of the property funding the trust is treated as a taxable gift to the heirs of the trust. The QPRT can be an effective technique for transferring a personal residence to a person's heirs at reduced gift and estate tax cost.