In Riese, a decedent’s continued use of a residence after the termination of her qualified personal residence trust (“QPRT”) did not result in the residence being included in her estate, even though she did not pay rent. In April 2000, the decedent created a 3-year QPRT. Under the terms of QPRT, if the decedent survived the 3-year term, the residence was to pass to separate trusts for her daughters. When the QPRT terminated in April of 2003, no deed was executed to transfer the residence to the continuing trusts. One of the daughters contacted the attorney who drafted the QPRT to inquire about calculating the fair market rent on the residence. The attorney explained that before the end of the year, the rent could be established by contacting a local real estate broker. However, in the interim, the decedent died. The fair market rent had not yet been established, and a lease agreement had not been executed.

 The court noted that although nothing actually changed after the QPRT expired, there was intent to enter into a lease. The court cited several instances where it was explained to the decedent that, after the termination of the QPRT, it would be necessary for her to pay rent in order to remain in the residence. Taking into account that the decedent was informed about the requirement, and that the daughter requested information concerning the rent calculation, the court determined that there was an agreement among the parties that a lease would be established before the end of 2003. The court found this to be reasonable under the circumstances. In addition, the court found that the estate was entitled to a deduction for the decedent’s accrued but unpaid rent at the time of her death