An example may help illustrate this technique. If an individual owns a home worth $200,000 and is 60 years of age, then he or she should expect to live for at least 10 more years. In such a case, the individual could put the home in a QPRT with a 10 year term. Thus, the individual gets to live in the home for 10 years and at the end of that term, the home belongs to his or her children (or other beneficiaries), or a trust for their benefit. This removes the home from the individual�s estate. The individual will use up some Applicable Exclusion Amount upon the gifting of the home into the QPRT, but this amount will be reduced by the value of the retained right to live there for 10 years. The home may appreciate over the 10 years to $400,000. Thus, in the above example, the then $400,000 home will be transferred to the children (or other

beneficiaries) while only using up $79,840 in Applicable Exclusion Amount. Thus, the individual has leveraged his or her Applicable Exclusion Amount by more than 5 to 1 (79,840 x 5.01 equals 400,000).

The Treasury Regulations require that the primary asset held by a QPRT be your �personal residence.� However, the term �personal residence� has a broader meaning than just your home. You are permitted to place any of the following into a QPRT: your principal home, a vacation home or an undivided fractional interest in either your principal home or your vacation home. In addition, you may set up two QPRTs, each containing different residences. Two spouses may also set up two QPRTs, each holding a partial undivided interest in one personal residence. If you desire to use a vacation home, you must meet certain technical qualifications regarding how much time of the year you spend there. You may not put real estate used in a trade or business into a QPRT, unless the business use is secondary to its use as a residence. No QPRT may hold an interest in more than one personal residence.

You may also place a certain amount of adjacent land into the QPRT, provided that this adjacent land is not in excess of that which is "reasonably appropriate for residential purposes."

As mentioned above, after transferring your personal residence into the QPRT, you would have the exclusive right to live in the residence for the term of years (determined by you and spelled out in the QPRT) or until death, if you die prior to the expiration of the term of years. If properly drafted, the QPRT will require that you have a reversionary interest retained in the residence. Such a reversionary interest will make the personal residence revert back to your estate if you predecease the term of years. At that point, the personal residence would pass under your Last Will and Testament, provided you have one.