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QPRT vs Ultra Trust Irrevocable Trust

When you have worked hard and invested time, effort and money to increase the value of your property, then it makes sense for you to hand the family home over to your children. The Qualified Personal Residence Trust (QPRT) has been used to reduce taxes and avoid probate while permitting parents to live in their homes. At the same time, high-indebtedness has led to more legal attempts to seize valuable property. By changing the laws, governments have started to close loopholes that were previously used to protect the value of a primary residence. Asset protection deals with concerns, like "fraudulent conveyance," "probate," "estate taxes" and "Medicaid nursing home reimbursement." The Ultra Trust Irrevocable Trust offers a more customized and complete solution than the QPRT.
While the Qualified Personal Residence Trust (QPRT) has been promoted as a solid way to reduce taxes and avoid probate, it suffers from serious limitations. By changing the ownership relationship between parent and child, the how can be sold without the parent’s consent and the parent could be evicted by the children. Selling the property or handling other life changes with the QPRT are very difficult due to its rigid structure. A properly drafted, executed, and funded irrevocable trust has many key advantages over the QPRT.

Asset Protection Is Essential to Estate Planning

Doctors, lawyers and athletes have become the targets of frivolous lawsuits threatening their livelihood and wealth. Many predatory attorneys are willing to "roll the dice" to siphon off a portion of this "well-deserved wealth" leaving the children with nothing.
Estate planning includes taxes, probate, inheritance and homestead considerations. As governments run out of money, they see a deceased person's assets as a great target for seizure. Asset protection includes the masking, hiding or protecting of assets using financial and legal arrangements. Some of the advantages to an UltraTrust are:
  1. May preserve the homestead exemption
  2. Transfers wealth to heirs
  3. Avoids probate
  4. Reduces estate tax
  5. Avoids a Medicaid nursing home spend down
  6. Irrevocable so its safe from financial predators
  7. Flexibility
  8. Hides or protects assets from prying eyes and greedy lawyers
While estate planning might satisfy the first six characteristics, the true asset protection plan will satisfy all eight requirements.

Why Doesn't the QPRT Protect Assets Effectively?

The Qualified Personal Residence Trust (QPRT) is a specialty trust transferring ownership of a personal residence (but no other assets or real estate) from the original owner (or grantor) as a "gift" to a trust to reduce estate taxation. The QPRT keeps the family home protected, transfers a valuable asset to heirs and allows parents to stay in the home, but it has a number of flaws compared to a well-designed irrevocable trust:
1. By giving up a home as a personal residence, the original owner loses tax-deductible benefits. The home value must be reassessed at fair market value. The original owner may see his taxes increase.
2. The QPRT establishes a period of time for the agreement, if the original owner dies before the time expires, the property returns to the estate for full taxation. This nullifies the entire reason for setting up the trust in the first place.
3. Mortgage payments are considered gifts. This can be very expensive if it triggers the gift tax.
4. Income and expenses accrue to the original owner. The original owner is still financially connected to the property.
5. It is very rigid due to the "set" time period. Selling a home in a QPRT is very difficult, although it is often touted as an advantage of QPRTs.
6. It does not deal with life changes in marital status or lawsuits. If the children are involved in a divorce, the parent may be evicted.
The QPRT creates a rigid arrangement that cannot handle life changes adequately. Tax advantages are lost and tax disadvantages are gained. The QPRT is not ideal asset protection.

The Successful Hide Assets in Broad Daylight

The Patriot Act has made it very difficult to truly "hide" assets because the burden of proof has been shifted - all are "presumed guilty until proven innocent." This allows the government to monitor most transactions within and outside of the United States. In fact, domestic trusts, such as the Ultra Trust can be better in most instances that an offshore trust. With a domestic Ultra Trust, the successful hide their valuable wealth in broad daylight by the using its sophisticated language and instructions for the trustee. The assets are still there, they are just owned by the trust and not attached to a person or family. Anyone looking into personal wealth probably won’t find the trust and therefore will be less likely to see the person as a financial target. The government, however, knows exactly where the assets are as the trust will file its own tax return.

The Ultra Trust is Superior to the QPRT

A properly drafted, executed, and funded irrevocable trust is well-suited and well-tailored to fit each family's needs. The Ultra Trust even qualifies as Protected Intellectual Property because it is not a boiler plate arrangement. It is individualized to the specifications of each family. This well-drafted trust can handle any major life changes - new child, death or lawsuit - that might arise. The only guarantee in life is change.
The goal of this well-designed trust is to create a "rock-solid" trust arrangement with an independent trustee and trust protector. This mirrors the American Federalist system of "checks and balances" where authority is divided to ensure there is no "abuse of power." Due to the complexity of this specially-tailored trust, it is a good way to "hide assets in broad daylight." Most entities trying to seize your wealth will not bother to challenge a well-constructed irrevocable trust.
Protect your assets by contacting us. The future of your family depends upon proper asset protection.
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Protect your assets for yourself and your children and beneficiaries and avoid tax dollars. Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with our Premium UltraTrust Irrevocable Trust. Call today at (888) 938-5872 for a no-cost, no obligation consultation and to learn more.
Rocco Beatrice, CPA, MST, MBA, CWPP, CAPP, MMB - Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an "AA" asset protection, Trust, and estate planning expert.



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