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Category: Estate & Retirement Planning
Qualified Personal Residence Trusts

A special kind of irrevocable trust can be used to transfer your residence to your children at a significantly reduced gift tax cost and with no estate tax, yet allow you to continue to live in the residence for as long as you wish. This special type of trust is known as a qualified personal residence trust (QPRT). (QPRTs are sometimes also referred to as “residence GRITs” or “house GRITs”.) Here’s how it works.

During your lifetime, you transfer your residence to the trustee, who (if state law permits) can be yourself. The trustee must allow you to continue to use the residence rent-free for a fixed number of years specified in the trust instrument (the “fixed term”), which should be a term you are likely to survive. During the fixed term, you will continue to pay mortgage expenses, real estate taxes, insurance, and expenses for maintenance and repairs, and will continue to deduct mortgage interest and real estate taxes on your individual income tax return. When the fixed term ends, the residence is distributed to your children, or remains in further trust for them. (more…)

Charitable Donation Documentation

It is now more important than ever to have proper documentation of your charitable contributions, the IRS may ask for you to produce your documentation. The IRS may do this by sending you a letter asking you to forward a copy of documentation.  While all contributions must be substantiated, contributions of $250 or more require a written receipt from the charity. If you donate property valued at more than $500, additional requirements apply.

For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written communication from the donee organization showing its name, plus the date and amount of the contribution. It’s not sufficient to maintain other written records, such as a log of contributions.

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A Majority of Americans are worried about paying for their House

See the link for article stating that 53% of Americans are concerned about being able to pay their rent or mortgage.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/27/AR2010102703683.html?wpisrc=nl_natlalert

Parent couldn't elect to treat disposition of sub's stock as asset transfer

In Chief Counsel Advice (CCA), IRS has concluded that the common parent of an affiliated group of corporations couldn’t, in the absence of final regs, make an election under Code Sec. 336(e) to disregard the intragroup distribution of a subsidiary and instead treat the transaction as a sale of the subsidiary’s underlying assets. (more…)

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