QPRT Exit Strategy 2009-05-01QPRT Exit Strategy 2009-05-01

Bruce J. Bettigole

Okay — you've sold your clients on the potential estate tax benefit to be achieved with a qualified personal residence trust (QPRT).¹ And you've explained that, with a married couple, the benefits can be even greater if each deeds only a 50 percent interest in the residence to a separate QPRT. Then, in addition to the valuation discount available for the QPRT, an additional fractional interest discount will be applied, thereby further reducing the taxable gift.

So, now the client wants to know: “What happens when the QPRT term is over and I still want to use the property?”

And you reassure him: “You'll just enter into a lease providing for fair market rent — no problem.”

But, will there really be no problem?

It's clear that...