Samantha is 50 years old and has three children. Samantha is relatively wealthy

Question

Samantha is 50 years old and has three children. Samantha is relatively wealthy and owns two homes that she splits time in each year. On the advice of her accountant, Samantha is looking for ways to reduce the value of her estate so that when she dies she won’t owe estate tax. To that end, Samantha created a qualified personal residence trust (referred to in the tax world as a “QPRT”). Samantha transferred ownership of one of her houses to the QPRT and retained for herself the right to live in and use the residence for a period of 20 years. After twenty years, the residence will pass to Samantha’s children who can then do what they want with it. Assuming Samantha has no rights with respect to the trust other than being able to live in and use the house, please answer the following questions: 1. Is the house included in Samantha’s gross estate if she dies 15 years after the formation of the trust? 2. Is the house included in Samantha’s gross estate if she dies 25 years after the formation of the trust?

Explanation / Answer

Yes, the house would be in included din Samanatha's gross estate if she dies 15 yars after the formation of trust. As per the stated case, S promised to transfer ownership of one of her houses to the QPRT and retained for herself the right to live and use the residence for next 20 years.

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