When Should Connecticut Residents Put Their Home in a QPRT?
A Strategic Estate Planning Tool for High-Net-Worth Fairfield County Families
If you own a valuable home in Fairfield County and are concerned about estate taxes, you may have heard about a Qualified Personal Residence Trust (QPRT). This sophisticated estate planning tool can significantly reduce gift and estate taxes while allowing you to continue living in your home. But QPRTs aren't right for everyone, and timing is crucial.
What Is a QPRT?
A Qualified Personal Residence Trust allows you to transfer your primary residence or vacation home to an irrevocable trust while retaining the right to live in the property for a specified term of years. At the end of the term, the home passes to your beneficiaries (typically your children) with minimal gift tax consequences.
The key benefit: the IRS values your gift at less than the home's current fair market value because your beneficiaries must wait years to receive full ownership. The longer the term, the greater the discount.
When QPRTs Make Sense for Connecticut Residents
1. You Have a High-Value Home
QPRTs are most effective when your residence represents a significant portion of your estate. In Fairfield County, where median home values in towns like Greenwich, New Canaan, and Westport often exceed $2 million, homeowners frequently find their residence alone could trigger federal estate tax exposure.
Sweet spot: Homes valued between $2-10 million typically see the most dramatic tax savings from QPRTs.
2. You're in Good Health
This cannot be overstated: you must survive the entire QPRT term for the strategy to work. If you die during the term, the home returns to your estate as if the QPRT never existed.
Consider a QPRT if:
You're under age 70 and in good health
You have no serious medical conditions that could affect longevity
Your family has a history of longevity
3. Your Home Is Appreciating
QPRTs work best with properties expected to appreciate significantly. All future appreciation occurs outside your estate, magnifying the tax benefits.
Ideal candidates: Waterfront properties, homes in desirable school districts, or properties with development potential that could see substantial appreciation over the QPRT term.
4. You Want to Live There Long-Term
You must genuinely want to continue living in the home throughout the QPRT term. While you can pay fair market rent to remain after the term ends, this reduces the strategy's effectiveness.
Consider your plans: Will you want to downsize? Move to Florida for tax reasons? Sell due to maintenance costs?
Connecticut-Specific Considerations
Estate Tax Landscape
Connecticut residents face both federal estate tax (exemption: $13.61 million per person in 2024) and Connecticut estate tax (exemption: $15 million per person). For married couples with combined estates over $27.22 million federally or $30 million for Connecticut purposes, QPRTs can provide substantial savings.
Property Tax Implications
Connecticut's high property taxes don't disappear with a QPRT. You'll continue paying property taxes during the term, and this ongoing expense actually enhances the gift tax benefits since you're effectively making additional tax-free gifts to your beneficiaries.
Income Tax Planning
Connecticut's income tax rates make it important to structure QPRTs carefully. Consider how the trust will file taxes and whether it affects your ability to claim homestead exemptions.
When QPRTs Don't Make Sense
You're Unsure About Long-Term Residence
If you might sell the home during the QPRT term, the strategy becomes problematic. While the trust can reinvest sale proceeds, this often defeats the purpose and creates administrative complexity. The juice isn’t always worth the squeeze.
Your Estate Is Under the Exemption Threshold
If your total estate (including life insurance death benefits) won't exceed applicable exemptions, a QPRT's complexity (and the cost to set up), likely doesn’t make sense. Focus on simpler strategies like annual gifting first. I believe the best estate plan is the one that accomplishes your goals with the least complexity possible.
You Need Liquidity
QPRTs tie up a major asset for years. If you might need to access your home's equity for long-term care or other expenses, consider other strategies.
Family Dynamics Are Complicated
Your children will become remainder beneficiaries with future interests in your home. If family relationships are strained or children have creditor issues, this could create problems.
Optimal Timing Factors
Interest Rate Environment
QPRTs work better when IRS interest rates (Section 7520 rates) are low, as this increases the valuation discount. Current rates make this a favorable time to consider QPRTs.
Age and Term Selection
Ages 55-65: Consider 10-15 year terms Ages 65-75: Consider 8-12 year terms
Over 75: QPRTs rarely make sense due to mortality risk
Market Conditions
Establishing a QPRT when property values are temporarily depressed (but expected to recover) maximizes benefits.
Working with Connecticut Professionals
QPRTs require coordination between estate planning attorneys, tax professionals, and appraisers familiar with Connecticut law and local property markets. The complexity demands experienced counsel who understands:
Connecticut estate and gift tax implications
Local property valuation issues
Trust administration requirements
Family dynamics and succession planning
The Bottom Line
A QPRT can be a powerful estate planning tool for Connecticut residents with valuable homes, but success depends on careful planning and realistic assessment of your situation. The strategy works best for healthy individuals under 70 with appreciating properties who plan to remain in their homes long-term.
Before proceeding, consider whether simpler strategies might achieve your goals with less risk. Sometimes the best estate planning is the plan you'll actually follow through with, rather than the most sophisticated option available.
Important Note: This article provides general information only. QPRT strategies involve significant legal and tax complexities that require personalized analysis. Consult with experienced estate planning counsel to determine whether a QPRT aligns with your specific situation and goals.
About the Author
Elizabeth Roache is an estate planning attorney based in Wilton, Connecticut, serving clients throughout Fairfield County, including Greenwich, Westport, New Canaan, Darien, Ridgefield, and Norwalk. She began her career at a major Wall Street law firm, gaining deep experience in complex legal matters, and now focuses her practice exclusively on estate planning. Elizabeth helps families at every stage of life—from everyday folks who want peace of mind to high-net-worth individuals seeking advanced asset protection strategies. Every client receives a personal, customized plan designed to reflect their unique goals and family circumstances.
Learn more at elizabethroachelaw.com or schedule a consultation.
