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BREAKING TAX NEWS
for September 23, 2008     USA Tax News      Tax Planning News Worldwide
 

Use a private annuity agreement to eliminate estate taxes & gift taxes, and to transfer assets from one generation to the next, while you retain lifetime income from the transferred assets in the USA, Canada, the Caribbean, Central America, South America, Europe, Asia, Australia, New Zealand, Africa, or the Middle East!

Definition
of Private Annuity – A private annuity agreement is an effective method of selling or transferring an asset whereby the seller (“transferor” or “annuitant”) sells or transfers the asset to the buyer (transferee) in exchange for the buyer/transferee agreeing to make certain, fixed-amount payments to the seller/annuitant until the seller dies. To qualify as a private annuity for U.S. tax purposes, in addition to other requirements, the buyer (obligor to make the annuity payments) must not be in the business of issuing annuities. This requirement does not affect non-U.S. residents and non-U.S. citizens.

The transferee can be one or more individuals, a general or limited partnership, a trust (domestic or overseas), or a corporation (domestic or overseas).


Thus, the basic essence of a private annuity is that a person, called the “transferor,” transfers property or money to a second person or trust (domestic or foreign), called the “transferee,” in exchange for the transferee’s unsecured promise to pay a lifetime income to the transferor.

If well-written, properly valued, correctly calculated, and properly implemented, a private annuity can save 100 percent of U.S.A. estate, inheritance taxes and death taxes, plus 100 percent of gift taxes on the property transferred from the annuitant to the transferee.

Moreover, there can be income tax savings through: (1) removing the transferred income-producing property from the ownership of a high-tax bracket taxpayer to a taxpayer with a lower rate of tax; and (2) spreading the payments of capital gains taxes over many years [the projected actuarial life expectancy of the annuitant in years] instead of just the year of sale.

Persons contemplating the establishment of a private annuity should first seek professional advice from their attorney and tax accountant as to how a private annuity may or may not benefit them in their own nation and individual financial and tax situation.

For a private annuity to be a sound move financially, the transferor should have a reasonably limited life expectancy either because of age
(e.g., over 55) or poor health.

None of the property transferred will be taxed to the estate of the transferor (at the death of the annuitant) if the annuity payments end completely at the death of the annuitant. If payments are for a fixed period of time extending beyond the annuitant’s death, or if payments continue to a second annuitant, the discounted (to the value at the date of death) present day economic value of such future payments will be included in the potentially-taxable estate of the annuitant.

To have annuity income go to more than one individual, it is normally better to arrange separate private annuity agreements so that there will be no residuary amount subject to estate tax at the death of each separate annuitant.

The transferor, transferee, and the private annuity itself (along with its assets) can be in the same nation or split among several legal domiciles (jurisdictions) such as the USA, Canada, the United Kingdom, Australia, New Zealand, France, Germany, Italy, or in any other nation, including strong and effective asset protection havens such as Belize, the Seychelles, or the Cook Islands.

A private annuity can be lawfully organized and located in the USA or in any other nation, including asset protection havens like Belize, the Seychelles, or the Cook Islands.

If the private annuity and its assets are located in another legal jurisdiction from that of the annuitant, that arrangement can help protect the private annuity assets from creditor efforts to seize the annuity assets and to garnish (seize) the annuitant’s private annuity income.

The private annuity agreement should include in its provisions spendthrift clauses that protect the annuitant’s income from loss to creditors.

The one-time fee to calculate and to form a private annuity agreement is US$2,000. If you would like the help is a Certified Tax Consultant in regard to your enjoying the immense benefits of a well-written and well-planned private annuity, please contact Phillip Fry. Email: incometaxplanning@yahoo.com    Phone: 63-919-375-0302 (Philippines) 7 p.m. to 7 a.m. Eastern Time (USA/Canada).
 

 

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To schedule your initial tax consultation with Mr. Fry, please email Phil at
incometaxplanning@yahoo.com, or phone him 63-906-510-4000, 63-919-375-0302,
or 63-35-226-3154 (Philippines) 7 p.m. to 7 a.m. Eastern Time (Canada/USA time).
FAX 63-35-226-3219


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