DEFERRING CAPITAL GAINS TAXES WITH THE PREMIER VI PRIVATE ANNUITY TRUST©
Benefits for Original Property:
There are certain benefits for the property which the annuitant transfers to the trust. They are:
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The entire value of the property is removed from the taxable estate of the annuitant. When the annuitant dies the payments to him cease and the annuity becomes null and void. This leaves nothing in the estate. Whatever is left in the trust will pass to the beneficiaries completely free of estate and gift taxes. (If the annuitant dies before receiving all the payments from an installment sale, the balance of the unpaid payments will be in his taxable estate.)
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This arrangement does not trigger any gift tax consequences no matter how much the property is worth. The private annuity is treated by federal tax laws as an arms length, buy-sell transaction for full and adequate consideration.
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The property will not need to go through probate when the annuitant dies. The property is removed from the annuitant's estate by the buy-sell annuity transaction.
Added Benefits to Annuitant and Family:
The deferral of capital gains taxes can produce a dramatic increase of cash in your pocket. But that is far from being the only benefit from using a Premier VI Private Annuity. Let's discuss some of these other benefits:
- The family of the annuitant controls the trust and all the money. Everything from the sale proceeds and all trust earnings either goes to the annuitant or to his heirs. When the annuitant dies everything left in the trust will go to his heirs.
- The trust can make a cash sale. It is not forced to make an installment sale to the outside buyer in order to spread out the capital gains tax. This is an advantage because you never know whether the outside buyer will make all the payments on an installment sale.
- The private annuity is the equivalent of receiving a tax free loan from Uncle Sam. The $160,000 of deferred taxes in our example above was used to benefit the annuitant for a period that covered 40 years.
- The formal mechanics of the trust arrangement provide the discipline that some find helpful in providing for their own retirement. The private annuity works equally well for single or married annuitants. Married couples can have the private annuity written as a joint, last to die contract
>THE C.G. TAX PROBLEM
>TAXATION
>DEFERAL OF PAYMENTS
>COMPARE A TAXED SALE
>ANNUITY PAYMENTS
>DEPRECIATION RECAPTURE
>BENEFITS
>PRIVATE ANNUITY vs. CHARITABLE REMAINDER TRUST
>PRIVATE ANNUITY AS A TAX STRATEGY
>QUESTIONS AND ANSWERS
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