For families in Jacksonville and Northeast Florida, a beach place can carry both memories and serious value. If you want to move that property to the next generation without giving up the right to use it now, a Qualified Personal Residence Trust (QPRT) can offer a structured option.
A QPRT is an irrevocable trust that holds a residence while you keep the right to live there for a fixed term. The tax rules treat the transfer as a gift of the remainder interest, not a gift of the full home value, because you retain a term interest. QPRTs operate as an exception under the special valuation rules for transfers in trust.
The trust has strict guardrails. During the initial term, the document must generally limit the trust to one residence (plus certain permitted cash/proceeds rules) and restrict who can occupy it while it remains available for your use.
QPRT gift value calculations rely on IRS valuation assumptions, including the Section 7520 rate and actuarial tables.
In plain terms, the rate helps determine the value of what you keep (your right to use the home for the term) versus what you give away (the remainder). When the remainder value drops, the taxable gift drops, too. The strategy tends to look more attractive when you expect the property to appreciate faster than the assumed valuation rate and you feel comfortable committing to the term.
A QPRT does not fit every family. If you die during the retained term, the residence can come back into your taxable estate, which undercuts the main benefit.
Also, once the term ends, you cannot treat the home as still yours. If you want continued use, families often set a lease and pay fair-market rent, which requires careful documentation.
Finally, QPRTs require tight drafting. The Internal Revenue Service even publishes model-style guidance for QPRT provisions, which tells you how technical the rules can get.
We help clients weigh whether a QPRT fits their goals, the property, and the family dynamics, then coordinate the trust terms with the deed and administration details. For planning help through Schnauss Naugle Law, call 904-643-6342 or use our intake form.
