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What is a Private Annuity?
A
Private Annuity is a contractual agreement of sale between two private
parties. Usually the seller (the annuitant – the parent) of an asset
transfers property to a family member (the obligor – the children or
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).
Benefits of
a Private Annuity Trust:
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- Eliminates Estate
Taxes on assets in the PAT
- Creates an
Income Stream for Life or Joint Lives
- Eliminates
the Headaches Involved with Property Management
- Offers an
estate planning alternative
- Maximizes Medicaid
Benefits by Protecting Family Assets from Recovery of Past Nursing
Home Expenditures
- Provides
Asset Protection in Case of Legal Disputes
- Avoids Expenses,
Delays and Publicity of Probate
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What
is a PAT?