|
There is another powerful concept. It's called a
Private Annuity Trust. These trusts have been around since 1939, but
until the last few years have primarily been used for Estate
Planning purposes. The Private Annuity Trust also works extremely
well for Retirement Planning. It is fairly complex to set up and
administrate, so many financial planners, real estate brokers, CPAs
and Attorneys still don't know much about them.
The procedure is basically this.
1. A Private Annuity Trust is established. You,
the seller become the annuitant.
2. A fair market appraisal is done to determine
property value.
3. The seller can negotiate a sale price at the
appraised value.
4. The property is transferred to the trust and
the trust is now the seller of the property and retains the
proceeds.
5. The proceeds are invested by trustees (not the
annuitant) and an arrangement is made to pay the annuitant (and
perhaps their spouse) in monthly payments for the remainder of their
lives. The capital gains tax is spread out over the course of your
lifetime. If you pass away before your estimated average calculated
life span, the remainder of the assets pass to the beneficiaries.
The balance will be passed free of Estate Tax, Gift Tax, Generation
skipping tax, and Transfer tax. Any capital gains tax still due will
be paid before disbursement.
6. Other properties or stocks can be added to the
trust at a later time, and recieve the same benefits.
As an example, let's say you have a million
dollar gain on a property. You might very well owe 350K in taxes.
With a Private Annuity Trust, all one million goes to work for you,
and you can receive montyly income for the rest of your life. The
exact amount is determined by your age and the time you choose to
begin receiving your payments. You have the option to defer
receiving payments until the age of 70 1/2. This allows the assets
to grow compounding and tax deferred, and allows for greater income
in the future.
The trust removes the assets from your estate, as
the trust now owns them and the annuitant relinquishes control over
how they are invested.
Setting up a Private Annuity Trust can definitely
give a turbo boost to your retirement bottom line. Ask yourself,
would you rather give a "gift" to the government in a big lump sum,
or would you like to pay in small chunks and have the bulk of your
profits working for you and earning compounded interest for years to
come?
Paula Straub will guide you through the process
of keeping your Capital Gains working for you and generating passive
income. To receive your invitation to her free teleconference, visit
Save Capital Gains Tax
|
Private
Annuity Trusts - Supercharge Your Retirement