This is a Form of a Private Annuity. Note that it is important for tax reasons to recite that the transferred property is not responsible for the payments due to the annuitants, and that the transfer of property is not secured. In doing a private annuity transaction, it is important that the annuity payments be made based on the value of both the transferred property and the actuarial life expectancy of the annuitant to avoid any inference of a gift; hence the references in the Agreement to these items.
Note that this Private Annuity is structured for the joint lives of a married couple. Of course, such an arrangement can also be made for a single person.
It may also be helpful to include some language suggesting the non-tax planning reasons for undertaking the annuity transaction, such as are indicated in the second and third “Whereas” clauses (i.e. management concerns and the need for a steady income).
SUGGESTED CLE COURSE: Please note: Mr. Siegel's excellent CLE Course "Planning For The New Medicare Taxes" is currently on our sister CLE/MCLE sites for online study at www.nlfonline.com or on audio cd/dvd at www.nlfcle.com. On both of these web sites, click on your state (or any state if you do not care about earning CLE credits) and scroll down to the course title, "Planning For The New Medicare Taxes", which appears under the heading "Other".
Steven G. Siegel is president of The Siegel Group, a Morristown, New Jersey - based national consulting firm specializing in tax consulting, estate planning and advising family business owners and entrepreneurs. Mr. Siegel holds a BS from Georgetown University, a JD from Harvard Law School and an LLM in Taxation from New York University.
He is the author of several books, including: Planning for An Aging Population; Business Entities: Start to Finish; Taxation of Divorce and Separation; Income Taxation of Estates and Trusts, Preparing the Audit-Proof Federal Estate Tax Return, Putting It Together: Planning Estates for $5 million and Less, Family Business Succession Planning, Business Acquisitions: Representing Buyers and Sellers in the Sale of a Business; Dynasty Trusts; Planning with Intentionally-Defective Grantor Trusts; The Federal Gift Tax: A Comprehensive Analysis; Charitable Remainder Trusts, Grantor Trust Planning: QPRTs, GRATs and SCINs, The Estate Planning Course, The Retirement Planning Course, Retirement Distributions: Estate and Tax Planning Strategies; The Estate Administration Course, Tax Strategies for Closely-Held Businesses, and Tort Litigation Settlements: Tax and Financial Issues.
Mr. Siegel has lectured extensively throughout the United States on tax, business and estate planning topics on behalf of numerous organizations, including National Law Foundation, AICPA, CCH, National Tax Institute, National Society of Accountants, and many others. He has served as an adjunct professor of law at Seton Hall and Rutgers University law schools.
The Siegel Group provides consulting services to accountants, attorneys, financial planners and life insurance professionals to assist them with the tax, estate and business planning and compliance issues confronting their clients. Based in Morristown, New Jersey, the Group has provided services throughout the United States. The Siegel Group does not sell any products. It is an entirely fee-based organization.
Contact the Siegel Group through its president, Steven G. Siegel, e-mail: email@example.com.