Ohio residents have a number of options available to them for asset protection against taxation, business succession and the protection of heirs against their own bad habits or the cunning of others. In some cases, beneficiaries and trustees face a learning curve when it comes to handling trust property and carrying out the instructions.
A qualified personal residence trust is one of several types of irrevocable trusts. This means assets become trust property and are removed from the benefactor's control immediately. The special exception of a QPRT is that owners can stipulate a certain number of years they can retain the option to live in the home before it is available to the beneficiary.
Owners will have several options. One of the more common has been to allow them to continue living in the home. This further reduces their taxable estate, as they must pay fair-market rent, and transfers non-gift assets to the beneficiary. However, the new owner(s) of the home will have to decide whether to sell, establish personal residence or rent the home out at some point.
As with other types of estate planning documents, trusts can serve multiple goals. Understanding the legal and tax ramifications of irrevocable and revocable trusts is an important part of maximizing asset protection and providing the most benefits to beneficiaries. For those exploring their options, an experienced attorney may be able to help. One benefit of certain types of trusts is that they can provide flexibility when it comes to making distributions. This might be an advisable alternative to leaving a will bequest to an heir who might be prone to squandering a lump sum inheritance.