Does the income from the annuity contract differ significantly from the income producing asset that was transferred?
(3) The Annuity Agreement should state the liability towards the Transferee and specify that the payments are made without regard to the income from the assets. (4) The Annuity payments are not limited only to the income from assets transferred into the Private Annuity. Thus, the trust should not give a “note” for the annuity payment. (5) The Transferor (Annuitant) must relinquish complete ownership over the assets transerred into the trust. The transferor and the transferor’s spouse must keep “an arms length agreement” from the assets inside the Private Annuity Trust. (6) The Transferor (Annuitant) must never receive any excess capital from the Private Annuity Trust’s assets, other than what the government determines to be his/her annuity income payments, fixed for the remainder of his/her life. (7) The Trust or Transferee should have resources in excess of the assets that were transferred into the Private Annuity Trust. (Rev. Ruling 68-183) This reserve requirement assures that the P
