What is a private annuity?
A private annuity usually involves two parties. The annuitant transfers property to another party, who is often the annuitant s grandchild or even great-grandchild. That party makes periodic payments for the life of the annuitant, with the life expectancy based on tables published by the Internal Revenue Service. When the annuitant dies, no federal estate tax will be owed on the property that was sold or transferred regardless of how many payments have been made. Instead, the property belongs to the party outside of the annuitant s estate and no further payments will be due. The private annuity thus reduced the size of the estate and averted what could have been a sizable tax bill.
Related Questions
- My attorney or tax advisor has never heard of a Private Annuity Trust or has heard of it and doesn think it is legal. How can they be assured that it is a legitimate Estate Planning strategy?
- Can a Private Annuity Trust be used to transfer a Family Limited Partnership or a Limited Liability Company?
- How are there no Estate and Gift taxes incurred through a Private Annuity Trust?
