Should You Consider a Qualified Personal Residence Trust?
For many high-net-worth individuals, the family home is more than just a place to live—it’s a significant asset, a repository of memories and, in some cases, a legacy to pass on. But as real estate values have climbed, it’s worth asking: Is your residence working as hard as it could be in your estate plan?
A Qualified Personal Residence Trust (QPRT) offers a strategic way to transfer a primary or secondary residence out of your taxable estate, while continuing to live in the home for a period of years. It’s a sophisticated tool, but for the right person, the benefits may be considerable.
What is a QPRT?
A QPRT is a type of irrevocable trust that allows you to transfer ownership of a residence to heirs—typically children or trusts for their benefit—while retaining the right to live in the home for a set number of years. This structure reduces the taxable value of the gift because you're not transferring full use and control immediately. Essentially, the gift is the value of your home less the value of your retained right to live in the home.
If you outlive the term of the trust, the residence passes to the beneficiaries with no additional gift tax. If not, the full value reverts to your estate. In either case, the trust can create opportunities to freeze or reduce estate taxes, especially for homes expected to appreciate significantly.
Why consider a QPRT?
A core advantage of a QPRT lies in its tax efficiency. Because you're retaining the right to live in the home for a set term, the value of the taxable gift is discounted. For example, if a 60 year old reserves a 20 year term of their $1 million home, the resulting gift value is approximately $252,000, depending on the interest rates, freeing up more of your lifetime exemption for other planning priorities.
Over time, as the property appreciates outside your estate, the tax savings can grow substantially. And once the term ends, rent payments made to the beneficiaries (or trusts for their benefit) offer a way to remain in the home and continue transferring wealth to your family tax-efficiently.
That said, QPRTs offer a tax-reduction strategy to utilize the increase in the federal estate and gift tax exemption to $15 million per individual (or $30 million per couple), starting in 2026.1 This higher exemption may give some families more breathing room, but QPRTs can still be valuable for locking in current property values and reducing future appreciation from the estate.
Some important considerations and trade-offs
As with any advanced planning tool, QPRTs come with important caveats:
- You must survive the trust term. If you don’t, the full value of the home re-enters your estate, negating the tax benefit.
- You give up control. After the term ends, the home belongs to the trust beneficiaries. To stay in the home, you’ll need to pay fair market rent, effectively turning your residence into a family-owned asset.
- It’s irrevocable. Once you transfer the residence into the trust, the decision generally can’t be reversed.
- It’s technical. QPRTs require careful legal drafting, IRS-compliant provisions and coordination with your broader estate and investment plan.
Additionally, the home must continue to be used as a personal residence throughout the trust term. Renting it out or leaving it vacant could invalidate the structure.
When a QPRT makes sense
QPRTs may be especially attractive if:
- You own a high-value primary or vacation home that might appreciate over time.
- Your estate may exceed the estate tax exemption amount.
- You want to retain use of the residence during your lifetime but ultimately pass it to your children in a tax-efficient way.
- You are confident in your health and longevity, and wish to "lock in" today's property values and interest rates for planning purposes.
Final thoughts
The family home often carries emotional weight, but it can also carry tax liability. For the right individuals, a QPRT offers a powerful way to transfer wealth efficiently while continuing to enjoy the property for years to come.
If you're considering a QPRT, or wondering how your home fits into your estate plan, connect with your Corient Wealth Advisor. Together, we can evaluate your goals, run the numbers, and determine whether this strategy aligns with your broader wealth plan.
1 https://www.kiplinger.com/taxes/big-gop-tax-bill-could-change-your-estate-planning
ABOUT THE AUTHOR
John Schuman
John is a Partner, Head of Wealth Transfer at Corient, based in our Columbus, OH, office. Previously, he was a Partner, Co-CEO and President of legacy firm Budros, Ruhlin & Roe. As a CERTIFIED FINANCIAL PLANNER™ certificant, licensed attorney and former Certified Public Accountant (CPA), he adds an exceptional perspective to the firm. John’s expertise includes estate planning and taxation, income tax, general business and succession planning, and charitable and retirement planning. He has been a featured speaker at conferences of the Columbus Bar Association, the Financial Planning Association (FPA), the National Association of Personal Financial Advisors (NAPFA), the Ohio CLE Institute, The Columbus Foundation and the International Association of Advisors in Philanthropy.
John holds a Bachelor of Science from The Ohio State University and a Juris Doctorate from Capital University Law School (summa cum laude). John is a member of the Financial Planning Association (FPA), the National Association of Personal Financial Advisors (NAPFA), and the Columbus, State of Ohio and American Bar Associations. He also serves as a member of the Professional Council of The Columbus Foundation.
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4827424 – September 2025
