Structuring Installment Sales to Intentionally Defective Trusts: Using Private Annuities and Promissory Notes
Transferring Appreciated Property Through Asset Sales and Installment Payments
Recording of a 90-minute CLE/CPE webinar with Q&A
This CLE/CPE webinar will provide estate planning counsel and advisers with a comprehensive and practical guide to structuring asset sales to intentionally defective irrevocable trust (IDITs). The panel will discuss the use of both promissory notes and private annuities in estate planning and will identify ideal scenarios for determining which payment vehicle to use. The event will also provide concrete drafting suggestions to avoid tax traps in structuring intra-family wealth transfers to defective trusts.
- Structure of standard sale to IDIT transaction using promissory note
- IRC Secs. 2036(a)(i) and 2702
- The Fidelity-Philadelphia Trust Co. case
- The Karmazin and Woebling cases
- Sale for a private annuity
- 50% probability of survivorship test
- The exhaustion test
- Another individual as measuring life
- Convert a note into an annuity based upon life
- private annuity vs. self-canceling installment note (SCIN)
- Structure of SCIN
- The Davidson case and CCA 201330033
The panel will review these and other key issues:
- What provisions should be included in the trust instrument to avoid income tax on the sale?
- How to avoid IRC 2036 issues in structuring a sale of appreciating assets for either a promissory note or a private annuity
- How should a sale and exchange for private annuity be structured to reduce the impact of the exhaustion test?
- Why private annuities should be preferred over self-cancelling installments notes
Julius H. Giarmarco, J.D., LL.M.
Chair of Trusts and Estates Practice Group
Giarmarco Mullins & Horton
Mr. Giarmarco's primary practice areas include estate planning, business succession planning, wealth transfer... | Read More
Mr. Giarmarco's primary practice areas include estate planning, business succession planning, wealth transfer planning, and life insurance applications. He lectures frequently on a national basis. He published a number of articles on estate planning appearing in professional journals and is also the author of the chapters on succession planning in Advising Closely Held Businesses in Michigan and The Michigan Business Formbook published by the Institute of Continuing Legal Education (ICLE).Close
Michael D. Mulligan
Mr. Mulligan is a principal originator of the estate planning strategy of sale to defective trust for an... | Read More
Mr. Mulligan is a principal originator of the estate planning strategy of sale to defective trust for an installment note, now widely used by estate planners nationally. He has been elected to the Estate Planning Hall of Fame® and has been awarded the Accredited Estate Planner® (Distinguished) designation by the National Association of Estate Planners & Councils. He is currently a member of the Editorial Boards of Estate Planning Magazine and The Journal of Taxation, having written numerous articles for both publications as well as the Journal of the Missouri Bar. He is a frequent lecturer on tax and estate planning subjects, and he has spoken at tax institutes and seminars across the country.Close