The remainder value of a house in a QPRT is the value of the right to reside in the house for the term of years specified in the QPRT document. The remainder value will be less if the right to reside in the property and/or the homeowner’s life expectancy is shorter rather than longer. In many cases homeowners will structure the QPRT term of years so that there is no or very little gift tax that has to be paid.

Generally, only families with net assets that exceed several million dollars need to focus on estate tax savings strategies. As such, QPRTs are most often used by high net worth families who own unencumbered real estate that is valued over $500,000 or $750,000 and where the homeowner is healthy and has a life expectancy that exceeds the term of the trust.

Homeowners who find themselves in this position have the added security in that even if Congress were to repeal the estate tax, the QPRT could still transfer the homeowner’s personal residence to younger generations, who might be able to use the tax attributes associated with real estate to offset their earned income.

Moreover, if the lower generations wanted to live on the property prior to or following the homeowner’s demise and then sell the property shortly after the homeowner’s demise, the younger generation might be able to use this period of time to qualify for the $250,000 income tax exclusion to avoid having to pay federal income taxes when the property is sold.

For these and other reasons, high net worth homeowners should still consider establishing QPRTs for their personal residences.

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