A qualified personal residence trust (QPRT) is an irrevocable trust used in estate planning to transfer a personal residence or vacation home to beneficiaries at a discounted gift tax value. The grantor retains the right to live in the property for a fixed term, after which ownership passes to heirs or another trust. The taxable value of the gift is reduced because the grantor's retained term is subtracted using IRS actuarial tables. If the grantor survives the term, future appreciation on the home is removed from the grantor's estate. If the grantor dies during the term, some or all of the property value is brought back into the estate. Qualified personal residence trusts work best for clients with high net worth, strong desire to keep property in the family, and willingness to accept reduced flexibility around selling or moving during the trust term.

In practice, attorneys design qualified personal residence trusts for clients whose homes represent a significant portion of their estates and who live in jurisdictions with meaningful estate or inheritance taxes. Advisors coordinate by updating balance sheets, modeling the impact of removing future appreciation, and evaluating how the trust affects housing plans and liquidity needs. Life insurance is often layered around a qualified personal residence trust to provide heirs with cash for taxes, to equalize inheritances for children who do not receive the home, or to replace value if the strategy does not work as intended. Clients must understand practical issues, such as who pays expenses during and after the term and what happens if they want to relocate. Ongoing reviews help ensure the trust remains aligned with evolving family dynamics and tax laws.