What Is a Qualified Personal Residence Trust (QPRT)?
A Qualified Personal Residence Trust (QPRT) lets you transfer your home into an irrevocable trust while keeping the right to live there for a set term. This strategy reduces your taxable estate and may lower future estate taxes, which helps families with high-value properties or multiple residences.
During the term, you live in the home rent-free. After the term ends, ownership passes to your beneficiaries, usually your children. This shifts future appreciation out of your estate and preserves family wealth. For current federal limits and rules, see the IRS Estate and Gift Taxes page.
In 2024, the federal estate tax exemption is $13.61 million per person. Minnesota’s threshold is $3 million; Arizona and Wisconsin do not impose a separate state estate tax. The federal exemption is scheduled to drop in 2026 unless extended, which can make QPRTs more valuable for tax reduction.
Who Is Eligible?
You must own a primary or secondary residence and be a U.S. citizen or lawful resident. A QPRT can hold only one residence and must state a fixed occupancy period. You keep the right to live there during that time, but you cannot sell or transfer the home outside the trust.
Creating a QPRT requires a trust agreement, a deed transferring the property, and, when needed, IRS Form 709 for gift-tax reporting. Because the rules are technical, work with an estate planning attorney and a tax professional.
Key Benefits
- Lower estate taxes: The taxable gift is discounted, which can reduce overall estate tax.
- Asset protection: Appreciation occurs outside your taxable estate.
- Continued residence: You live in the home rent-free for the full term.
- Gift-tax efficiency: Your retained interest reduces the reported gift value.
- Planning flexibility: You can pair a QPRT with revocable trusts or life insurance trusts.
Drawbacks and Risks
- Mortality risk: If you die before the term ends, the home returns to your taxable estate.
- Inflexibility: QPRTs are irrevocable; changes are limited.
- Post-term rent: If you remain in the home after the term, you must pay fair-market rent to beneficiaries.
- Complex rules: Drafting must follow 26 CFR § 25.2702-5 and related IRS guidance.
State Notes: MN, AZ, WI
Minnesota: The $3 million estate-tax threshold makes QPRTs a common tool to reduce exposure. See the Minnesota Department of Revenue, Estate Tax.
Arizona and Wisconsin: No state estate tax currently applies, so families often use QPRTs to shift appreciation, protect assets, and plan intergenerational transfers while coordinating federal tax goals.
How We Help
QPRTs require careful coordination of tax, title, and trust terms. Metropolitan Law Group designs and funds QPRTs for clients in Minnesota, Arizona, and Wisconsin. We align the trust term, actuarial assumptions, and deed work with your broader estate plan. Learn more about our trust-based planning and, if probate is a concern, our probate services.
Book a Discovery Call
See whether a QPRT fits your goals. Book a complimentary 15-minute Discovery Call with our experienced staff or call 866-902-6148. Minnesota office: 612-524-9414. Arizona office: 480-409-8200.
