A qualified personal residence trust allows the grantor to do what?

A qualified personal residence trust (QPRT) is a specialized estate planning tool that enables the grantor to transfer the ownership of a personal residence into the trust while retaining the right to live in the residence for a specified term. By choosing the correct answer, it reflects the fundamental characteristic of a QPRT, where the grantor can continue living in the home for the duration of the trust term without immediate tax consequences associated with the transfer.

This arrangement is advantageous because it allows the grantor to remove the value of the residence from their taxable estate while still enjoying the benefits of living in the home. Once the trust term ends, the property is transferred to the beneficiaries named in the trust, which can result in significant estate tax savings. This structure exemplifies how trusts can provide both tax benefits and living arrangements for the grantor during the trust term.

The other options involve misconceptions about the mechanics and implications of the QPRT, such as tax liabilities or outcomes that contradict the essential purpose of the trust. Understanding these specific features is critical when considering estate planning tools like the QPRT.