If you're a reader of this blog, then you likely know that there are many estate planning options available to you. You can utilize a will, a trust, a power of attorney, a health care directive, or some combination of these tools. What is important is that you pursue whatever planning strategy suits your needs, as well as the needs of your estate and your loved ones. This isn't always easy to determine, though.
Most Arizonans do know that they want to leave their home to a loved one or jointly to multiple loved ones. While this may be accomplished through a trust or a will, there is a particular type of trust that may be attractive to those who find themselves in this position. The qualified personal residence trust allows a homeowner to transfer title of a residence to another individual, or a trust, while retaining the ability to reside in the home. The biggest benefit of this type of trust is that transfer taxes can be reduced because they will be based on the value of the home at the time that the home is transferred to the other individual or the trust, rather than the likely increased value of the home when the homeowner passes away.
There are some complications that can arise with these types of trusts. For example, the amount and use of surrounding land will be considered before it can be determined whether it will be deemed appropriate for the qualified personal residence trust. Also, if the homeowner survives the term of the trust, then he or she may be subjected to rent on the household, which may be problematic if the home was transferred to the homeowner's children.
Estate planning can be basic in nature, and if often looks like a relatively easy task to undertake. However, those who want to fully protect their estate's financial interests and an appropriate distribution of their estate's assets need to consider discussing the details of their estate plan with an experienced legal professional.