The Ins and Outs of the Personal Residence Trust

The Ins and Outs of the Personal Residence Trust

New Castle Business Ledger
by Nancy F. Blumberg, CPA, CFP
Simon Master & Sidlow, P.A.

Transferring family wealth has been limited by legislation so that many traditional estate planning techniques are no longer available.However, one of the remaining techniques which involves your personal residence has become increasingly popular.The use of a grant or retained interest trust has the potential to save you substantial estate taxes.

You can transfer your wealth to your children or others and retain the use of your home for a fixed number of years.By using a qualified personal residence trust (QPRT) you can avoid estate and gift taxes on any future appreciation in the value of your home and you can make this transfer as a relatively small taxable gift.The value of your gift is the value of the future interest of your residence.This will depend on the current value of the home, the current interest rates and the number of years you wish to retain your interest in the home.A QPRT can be used for your personal residence as well as a vacation home. More…

Life Disposition of the Family Business

Life Disposition
of the Family Business
Succeeding Generations
Fall, 1996

by Barbara Gill, CLU, ChFC, CFBS
& Dale J. Seymour, CLU, ChFC, CFBS
Seymour and Associates

Retiring from the family business?What does one do?Sell to other family members?Sell to an outsider?Perhaps retain the family business and gift portions annually to other family members.What about an installment sale or private annuity?Is an ESOP an alternative?What about charitable remainder trust?How does one structure the deal so that the buyer can afford to buy and the seller can afford to retire?Fortunately, there are many creative planning opportunities available to assist the family business owner who desire to create an exit strategy.Planning in advance becomes the key.

Without question, there are many choices to be made regarding business transfers during a lifetime.One option the family business owner always struggles with is whether or not to sell the family business to family members or an outside third party.In the event of structuring a sale with family members, several particular questions should be addressed.

First, are all of the family members interested in buying a proportionate share of the business?Secondly, should all the family members be involved in the business?If not, how do we treat those who don’t buy a proportionate interest?Should they receive a minority position in the business anyway?Of course, one could alternate the bequests for non-involved family members if sufficient assets are available. More…