Leveraging Qualified Personal Residence Trusts (QPRTs) for Estate Planning in Broward County: A Complete Guide

At AnidjarLaw, we know that for many Broward County residents, their home is not just their largest asset, it’s also where family memories are made and preserved. For homeowners in Hollywood, FL, and surrounding communities, safeguarding that property while reducing potential estate taxes is an important part of long term estate and asset protection planning.

One powerful tool recognized under federal tax law and available to homeowners nationwide is the Qualified Personal Residence Trust (QPRT). While our team at AnidjarLaw drafts QPRTs pursuant to Florida trust law, this strategy can be applied to residences in other states as well, including vacation homes or secondary properties. A QPRT allows you to transfer your home to beneficiaries at a reduced gift tax value while retaining the right to live in it for a fixed term. This approach not only helps minimize estate tax exposure but also locks in the property’s current value for transfer purposes, a significant advantage in appreciating markets like Broward County and throughout South Florida.

This guide will walk you through

How QPRTs work under federal and Florida law
Why they can be a valuable component of an estate plan
Key requirements and rules for setting one up
The advantages and potential drawbacks you should consider

By the end, you’ll have a clear understanding of whether a QPRT could help protect your assets, preserve your family’s wealth, and create a smooth path for transferring your home to the next generation.

What Is a Qualified Personal Residence Trust (QPRT)?

A Qualified Personal Residence Trust is an irrevocable trust designed to hold either your primary residence or one secondary residence (such as a vacation home). When you establish a QPRT, you transfer the title of the property into the trust but retain the right to live in or use it for a predetermined number of years, known as the trust term. Once the term ends, the property passes to your beneficiaries outright or remains in trust for their benefit. The value of the taxable gift is reduced because the IRS subtracts the actuarial value of your retained right to live in the property from its current market value. This is calculated using the Section 7520 rate and other IRS tables, meaning the transfer is recorded at a discounted value for gift tax purposes. For Broward County homeowners, this can be an effective way to transfer high value real estate while keeping gift and estate taxes as low as possible.

Why QPRTs Are Popular in Broward County and Hollywood, FL

Property values in South Florida, especially in coastal communities, have seen consistent appreciation over the years. A home worth $750,000 today may be worth over $1 million in the near future. Without proper planning, that appreciation can lead to larger taxable estates and higher estate tax obligations for heirs.

By locking in the value of your property at today’s numbers, a QPRT ensures that any future growth in value passes to your beneficiaries without additional estate tax. This makes QPRTs a particularly appealing tool for owners of waterfront homes, luxury condos, or high demand residential properties in Hollywood, Fort Lauderdale, and other Broward County areas.

IRS Requirements for a QPRT

For a QPRT to be valid and receive favorable tax treatment, it must follow strict IRS guidelines under Treasury Regulation Section 25.2702-5. Some of the key requirements include:

1. Eligible Property

The QPRT can hold only your primary residence or one vacation home.
It may also hold limited cash reserves for expenses and insurance, but not unrelated assets.
In Broward County, this could be a waterfront home in Hollywood, a Fort Lauderdale condo, or a second home in another Florida location.

2. Retained Use Period

You choose the length of time you want to retain the right to live in the property.
Longer terms reduce the taxable gift but carry the risk that the property’s value will be included in your estate if you pass away before the term ends.

3. Restrictions on Sale to the Grantor

After the QPRT term ends, the property cannot be sold back to you or your spouse.
The trust can sell the property during the term, but proceeds must be used to buy another qualifying residence or be converted into a qualified annuity.

4. Tax Treatment During the Term

Most QPRTs are structured as grantor trusts, meaning you report all income, deductions, and credits on your personal tax return.
You can continue to deduct property taxes and mortgage interest during the trust term.

Benefits of Using a QPRT in Florida Estate Planning

Significant Estate Tax Savings

By transferring your home into a QPRT, you effectively “freeze” its value for tax purposes. Any appreciation during the trust term escapes estate tax entirely.

Continued Use of the Home

You can live in your home for the entire trust term without paying rent. After the term ends, you can remain in the home by renting it from your beneficiaries at fair market value, which can also shift additional assets out of your taxable estate.

Ideal for High Value Properties

Because Broward County property values are often high, the estate tax savings can be substantial. The higher the appreciation rate, the greater the long term benefit to your heirs.

Tax Efficiency

You remain responsible for property taxes and maintenance during the term, and those payments are not considered additional gifts to your beneficiaries.

Potential Drawbacks and Risks

Mortality Risk

If you pass away during the trust term, the full property value will be included in your taxable estate, eliminating the anticipated savings.

Loss of Step-Up in Basis

Beneficiaries receive your original cost basis in the property, which could lead to capital gains taxes if they sell it later.

Limited Flexibility

Because a QPRT is irrevocable, once it’s created you cannot change the beneficiaries or take back the property unless you buy it back at fair market value after the trust term.

How AnidjarLaw Can Help You Structure a QPRT

A QPRT can be a highly effective part of an estate plan, but only if it’s designed correctly from the outset. At AnidjarLaw, we provide comprehensive guidance for Broward County residents considering this option. We evaluate your property’s current market value, projected appreciation, and overall estate plan to determine the ideal trust term and structure.

Michael Anidjar’s background as both an attorney and CPA means you’ll receive coordinated legal and tax advice, ensuring compliance with IRS rules while maximizing the potential benefits.

We also guide clients in integrating QPRTs with other estate planning tools, including:

Revocable (or Living) Trust planning to avoid probate administration that can be costly and a lengthy process
Qualified Terminable Interest Property (QTIP) Trust
Real Estate & Homestead Planning to protect property rights under Florida’s homestead protections
Asset Protection planning to help safeguard inherited property from creditor actions

Whether you own a single family home in Hollywood, a luxury condo in Fort Lauderdale, or a vacation property elsewhere in Florida, we can help you explore whether a QPRT fits your objectives, and if so, handle the full drafting, filing, and implementation process.

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2. Experienced Probate Attorneys

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Fill out the contact form or call us at (954) 900-9871 to schedule your consultation.