Shoreline Wealth and Investment Mangement  

Sign up and receive
the free report
’27 Tips for Choosing
a Financial Advisor’

Private Annuity Trusts

Private Annuity Trusts
For those with highly appreciated residential or commercial real estate investments who are looking for a strategy to avoid, defer or reduce their capital gains tax consequences, the private annuity trust offers many unique benefits.

How Private Annuities Work

1. The process begins with a property owner transferring ownership of the property to a dedicated family trust

2. The trust "pays" the property owner (annuitant) for the property

3. The payment isn't in cash but with a special payment contract called a "private annuity"

4. This private annuity promises to make payments to the annuitant for the rest of his or her life

5. After the death of the annuitant, the trust then sells the property

6. There are no taxes to the trust upon sale since the trust "paid" for the property in the form of a private annuity
Questions EVERY Diversified Investment Advisors should ask you...
SWIMLLC vs. Warren Buffet... who performs better?

Reasons to Create a Private Annuity Trust

1. The seller of the property (annuitant) can choose deferral of annuity payments if they have other sources of income and/or don't need payments to begin immediately

2. The IRS tax code doesn't require payment of the capital gains until the annuity payments begin

3. Capital gains tax is paid to the IRS with an "easy installment plan" since only that portion of capital gains is due in proportion to the number of years the annuitan is "actuarially" stated to live (a 65-year old will, on average, live 20 years meaning the capital gains tax is paid over 20 years at 1/20 per year)

4. There is no interest or penalty on deferring payments of capital gains taxes due

5. Capital gains taxes are paid with "depreciated" dollars since the value of the dollar declines over time due to inflation

6. The balance remaining in the private annuity trust can grow at a rate greater than inflation to retain purchasing power of the balance remaining

Other Important Information on Private Annuity Trusts
1. Payments received by the seller (annuitant) of the appreciated property are based upon: 1) the age of the annuitant; 2) the net selling price of the property (actual price less any mortgages, fees or commissions); and 3) the length of the deferral, if any, until payments begin

2. Payments continue until the annuitant(s) die regardless of whether it is sooner or later than the expected (actuarial) time

3. The proceeds remaining in the trust are extremely flexible and can purchase additional real estate or more traditional stocks, bonds or money market investments

4. The annuitant can borrow from the trust

5. Believes the children will need to spend their inheritence

6. Upon the death of the annuitant(s), the estate receives the remaining balance with no taxes due

Shoreline's Competitive Edge
Whatever your estate planning need, Shoreline Wealth and Investment Management can assist you in obtaining the best estate and legal advice available.

For more information:
If you'd like more information about how diversified investment advisors can help you achieve your financial objectives through personalized wealth or retirement and risk management strategies, please contact us. We welcome the opportunity to discuss your unique needs and how we may best meet them.

This page (formatted for versions 10.0 and higher of Internet Explorer) is updated regularly so check in from time-to-time to see new articles and updates. You can click on any underlined words on each page to see a specific wealth management topic in the left margin of each page.

Charles M. Bloom, Registered Principal offers securities and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.

The information contained in this web site is neither an offer nor solicitation of any security or service.


Shoreline's Home Page
Return to home page


“Thank you for making your presentation very professional and honoring the non-commercial aspect of the seminar”

- Delco Electronics

Sign up and receive
the free report
’27 Tips for Choosing
a Financial Advisor’
  Shoreline Wealth and Investment Management - Phone: 805.886.3624 - E-Mail: