Asset protection is one of the things to take into consideration when you are positioning your assets and making plans for the future. When you are inventorying your assets, you will likely find that your home is the most valuable thing that you own. So protecting your home from creditors and claimants will be one of your primary objectives.
If you are like most people, you intend to leave your home to your children someday. If you are concerned about estate taxes, you can protect your home and save on estate taxes by placing it into a qualified personal residence trust.
Once you fund the trust and name your beneficiaries, you determine a period of time during which you will continue to live in the home rent-free. Funding the trust removes the value of the home from your estate for estate tax purposes and safely shields the property from claimants seeking redress.
There is the gift tax to contend with, but the taxable value of the gift is reduced by the interest that you are retaining in the home while you continue to live in it. Ultimately the taxable value will be far less than the actual value of the property on the fair market.
For those concerned about estate taxes, a qualified personal residence trust can be an important part of your comprehensive plan for the future. To learn more about these vehicles and other estate planning tools, arrange for an informative consultation with a Northern Kentucky estate planning lawyer.