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Deferring Capital Gains Taxes and Avoiding Gift and
Estate Taxes without 1031.
What is a Private Annuity?
A Private Annuity is a contractual agreement of sale between two private parties. Usually the seller (the annuitant- the owner of the property) of an asset transfers property to a family member (the obligor - the heirs) in exchange for a "special payment contract  (an annuity) of substantially equal value. The obligor is then responsible for making annuity payments to the annuitant during his/her lifetime.
What is a Private Annuity Trust?
A Private Annuity Trust (PAT) is a specialized and sophisticated trust designed to give structure and convention to the private annuity contract. The trust may sell and use the proceeds to provide an income stream for the life of the annuitant(s).
Private annuity trusts provide a powerful alternative capital gains tax reduction strategy to the section 1031 exchange to defer capital gains tax, eliminate estate/inheritance taxes, and to transfer appreciated real-estate property to one's heirs with deferred capital gains and depreciation recapture taxes.
A private annuity trust (PAT) provides owners of highly appreciated assets such as businesses, real estate, and stocks/equities the following benefits:
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Capital Gains Tax Deferment
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Eliminates Estate Taxes on assets in the PAT
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Creates an Income Stream for Life or Joint Lives
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Investments Flexibility to generate greater return
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Offers a "1031" Alternative Strategy
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Deferred Depreciation Recapture Taxes
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Disciplined Retirement Savings
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Family Controlled
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Provides Asset Protection in Case of Legal Disputes
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Tax Free Estate/Inheritance Transfer to one's Heirs
In many respects, a PAT is superior to a charitable remainder trust (CRT), installment sales. And unlike a section 1031 like-kind real estate tax exchange, a PAT can be created from the sale of a variety of appreciated assets and not just sale of real estate property.
Mrs. Rosanna Zielke-Orlovsky is Private Annuity Trust Advisor for ZR Asset Protection & Insurance, Inc. She and our affiliated financial services relationships specialize in tax deferral of capital gains and potential elimination of estate taxes using a private annuity trust.
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To speak with a live, licensed PATA Specialist,
call us toll-free at 1-877-834-6654 or
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As illustrated below, the Premier VI Private Annuity Trust has the ability to generate substantially more money over the long run than a direct and taxed sale.
This trust is especially useful for deferring taxes on appreciated assets such as real estate and other equities - for property that does not qualify for 1031 tax treatment as well as 1031 qualified property.
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Private Annuity Trust versus Taxed Sale
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Taxed Sale
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Annuity Deferral
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Selling Price
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$2,500,000
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$2,500,000
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Basis
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-500,000
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-500,000
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Profit
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2,000,000
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2,000,000
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Capital Gain Tax
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500,000
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Deferred
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NET INVESTMENT CASH
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$2,000,000
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$2,500,000
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Deferral Period
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20 Years (7.4% Growth)
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20 Years (7.4% Growth
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Annuitant Present Age
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45
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45
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Annual Payout
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$950,250
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$1,187,820
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EST. LIFE PAYOUT
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$19,005,000
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$24,756,400
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PAT ADVANTAGE
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$4,751,400
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ANNUITANT
Tax Free Build up to Annuitant.
No Capital Gains Taxes Owed by Annuitant from Sale to Trust.
Annuity Payment Amount Remains the Same for Both Spouses
(payment continues until the second death - "Last to Die").
ANNUITY PROPERTY
No Estate Taxes, Ever
No Gift Taxes, Ever
No Probate, Ever
No Medicaid Claims
TRUST OWNERS
The Heirs - Your Family - are Beneficiaries
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