In today's Wall Street Journal, there was a featured article by reporter Rachel Silverman on the topic of private annuity trusts.
Of particular interest to readers of this blog is the mention of Structured Sale Annuity contracts as a very attractive alternative to the somewhat flawed and risky private annuity trust.
As you know i'm neither a fan or opponent of the private annuity trust, 1031 exchanges or other deferral tools. Each has their place in the estate or tax planners tool box. However, it does make you pause when you read that the IRS and other tax experts are starting to look at many of the private annuity trust products and questioning the claims being made about deferral, returns and the risks involved.
Also, for the first time someone pointed out the costs of the annuity trusts, specifically set up costs that can range up to $10,000 in addition to management fees of 1% a year or more on the assets while they are held. This compared to the fixed cost guarantees offered by the Allstate structured sale annuity product, which as readers know, is my preferred choice for structured installment sales of real property.
This article should have a positive effect on the secured installment sale using the structured sale annuity as it nicely outlined all of the risks of the major options, while discussing briefly the benefits or attributes of the structured sale. We have been successful in closing several moderately sized structured sale cases, and have several more currently in the works. What I've found is that the "typical" buyer is over 60, net worth less then $5 million and is selling a capital asset that represents a substantial portion of their wealth and future income. Those types of clients are drawn to the security and guarantees of the Allstate structured sale annuity product, and as other companies come online with their competing versions, acceptance of this method should increase dramatically.