To pass on your Brigantine New Jersey real estate to your children, perhaps you should consider a Qualified Personal Residence Trust. According to Toddi Gutner in Business week, this could be the solution for you:
Qualified Personal Residence Trust:
1. This trust term is 5 to 15 years. Parents retain ownership and still benefit from all property tax deductions.
2. After the turnover, parents pay fair market rent to the heirs. The value of the home is discounted for trust purposes--factoring in the owner's age, the length of the trust term, and the Internal Revenue Service's monthly "hurdle" interest rate--and split to represent the value of the gift and the value of the right to reside on the premises, or the retained interest.
3. The gift value typically is smaller than the retained interest. This lessens the tax burden placed on the heirs.
4. Those who do not want their children to become their landlords should consider setting up another trust after the original trust term ends, appointing trustees to be in charge of making decisions about the property.
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