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A QPRT is an irrevocable trust into which you place your primary residence or second residence but retain the right to live in that residence for a specified period of time.  It is very similar to the GRAT (see our separate explanation of a GRAT) except that you retain the right to live in the house as opposed to receiving payments.

We use the IRS’s arbitrary rules to establish a discounted gift tax value for the remainder interest that will pass to your children. That gift usually computes out to be approximately 25% – 35% of the value of the residence at the time the trust is set up. Unlike a GRAT, it is difficult to zero out the gift. At the end of the stipulated time period, the residence, including all the appreciation, can pass to your children estate tax free.

You must survive to the end of the