New York Attorney Designs Trusts to Keep Your Home in the Family
Leveraging gift and estate tax exemptions to pass your home to your children
If you’re like most families, your home is your most valuable asset. But given the escalating cost of real estate, you may have a difficult time keeping that home in the family. Even though estate tax exemptions have risen, your home’s appreciation over the next decade or so could swell your estate sufficiently to trigger the tax, causing your heirs to lose a significant portion of your hard-earned wealth. Fortunately, prudent estate planning provides a way to avoid such unnecessary losses. The Cormac McEnery Law Firm can show you how a Qualified Personal Residence Trust (QPRT) can protect your most important asset.
How a QPRT operates to lower the cost of transferring your house
When you create a QPRT, you make a gift of your home to your heirs, effective in a certain number of years. Since you’re not giving the home outright, you’re only held accountable for having given a percentage of the home’s value, which usually fits within your lifetime gift tax exemption. (Gift tax is an amount the giver of a gift must pay to the government.) When the term of the trust runs out, the home becomes property of your heirs (or a trust), so you no longer own it. Thus, when you die, the home is not part of your estate, so it can’t trigger estate tax.
The term of the living trust must be calibrated to your circumstances. If you pass away before the term, your heirs inherit the home, possibly triggering estate tax. If you outlive the term of the trust, you can continue living in your home, but must begin paying fair market rent to the owners, your heirs. Although that turnabout may seem unsettling to some parents, others find it advantageous, because they can continue to “gift” wealth to their heirs, further diminishing the taxable estate.
Our law firm helps clients create trusts for a variety of other purposes, including protecting spendthrift heirs and providing for children from a first marriage. We listen carefully to your thoughts and concerns, and craft an estate plan that targets your specific goals.
To securely pass your New York home on to your heirs, contact our law firm
A qualified personal residence trust can keep your home securely in your family. If you own a home within the five boroughs of New York City, or Westchester, Nassau and Suffolk counties, the Cormac McEnery Law Firm is available to assist. To schedule a free consultation, call us at 888.368.4329 or contact us online.