Private Annuity Trust

Private Annuity Trust

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Private Annuity Trust

Private Annuity Trust definition:  A private annuity contract is not purchased from an insurance company. Instead, an asset is exchanged for lifetime income with a family member.  This contract is accomplished through an irrevocable trust that avoids gift and estate taxes because the asset was sold. Tax laws were changed in 2006 so that capital gains tax cannot be deferred with a private annuity trust.  Annuity payments from the trust will end when the grantor dies or the money is depleted.  Beneficiaries can be named to receive all balances that outlast the grantor’s lifetime.

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