A savvy estate planning move may be to put your home (or a second home) into a qualified personal residence trust (QPRT). To implement this tactic, you set the trust term and transfer property ownership into a QPRT. After the trust term ends, the house will go to the trust beneficiaries, who might be your children.
If you survive the trust term, the house will be removed from your taxable estate. The delayed nature of the transfer will minimize gift taxes.
For example, with a 20-year QPRT, if long-term interest rates are at 5 percent, you could transfer a $500,000 house yet incur less than $190,000 in gift tax. No gift tax need be paid, because of the $1 million gift tax exemption, yet the house will be out of your taxable estate
Even after the term of the trust, you can stay in the house, if you wish, by paying a fair rent to the new owners. These rental payments, too, will reduce your taxable estate.
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