I have received many questions about different types of property ownerships, and whether they can be split and placed in a Private Annuity Trust.
First, I must say that I am not an attorney. That is why I work with competent legal professionals who can answer individual case situations properly.
Let me give you an example of how a LLC transfer might work. Let's say Joe Black is a 25% shareholder in an LLC that owns a 1 million dollar building. The shareholders wish to sell the building and Joe does not want to pay capital gains tax at time of sale.
It is possible that Joe can sell his 25% interest in the building to a Private Annuity Trust that is created for him. The trust will become a shareholder of the LLC. Just before the sale is completed, the Trust takes ownership of the 25% share (250K) interest, and receives the cash from the sale. An "annuity" is exchanged for the cash and Joe will be guaranteed an income for the rest of his life from the trust. The exact amount of payments is based on his age, when he wishes to begin receiving payments and over how long a period of time, the amount of cash received and the current Federal Mid-Term rate.
The trust will be responsible for paying out whatever tax would have been due at the time of sale, but it will be spread out over many years.
Each case is very different, but there is often a solution that will save a great deal of money. Why pay huge sums upfront if you don't have to?
Paula Straub
http://www.savegainstax.com
askpaula@savegainstax.com
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