Residence is 50% W separate property and 50% H separate property. Can W put her 50% in QPRT even if H disagrees? If so, how does this work and what are pros/cons for H and W estates when they die? Does QTIP negate the child's benefit of keeping ...
Yes, W can do with her separate property as she wishes. It is generally preferable to fund QPRTs with separate property. In most situations, the residence is jointly owned by the spouses and the first step is to sever that joint ownership and create equal separate property interests. Then, each spouse contributes their respective separate property interest into their separate QPRT. Were the residence to be contributed to a joint QPRT, the marital deduction calculation would be nearly impossible to determine.
The pros and cons are unknown without additional facts. For example, what are the spouse's respective ages? How long is the initial term? What is the residence's value? Whom will be the QPRT remainder beneficiary?
The QPRT can be structured such that upon termination the transfer to the remainder beneficiary should not result in reassessment for property tax purposes.See question
When deciding on initial term of QPRT (say 15 years FBO child) for parent in good health in early 60's, can a provision be designed into the QPRT when created so as to allow for extending the term (either FBO same child or grandchildren)? Is it n...
A QPRT is an irrevocable trust. So, once it is executed, it's term cannot be revised. As a general matter, a QPRT is not an appropriate vehicle for someone whose residence is their primary asset since it is likely they will need the equity for retirement. That said, properly structured QPRT can still be helpful in this situation. For example, you can transfer just a portion, e.g., 20%, of the residence to the QPRT. That way, if the grantor outlives the initial term, then (i) a 20% interest will be removed from the taxable estate; (ii) rent will only have to be paid on the 20% interest; and (iii) the value of the retained interest (80%) will be worth less since a tenancy-in-common discount will apply. Then, depending upon financial circumstances and comfort levels, another QPRT can be established with an additional fractional interest.
Separately, upon QPRT termination, rent can be avoided altogether by entering into a reverse QPRT arrangement.See question