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Advantages of a Structured Sale

An October 19, 2006 article in the Wall Street Journal concerning the IRS plan to limit a deferral strategy is causing confusion about Structured Sales. The Private Annuity Trust ("PAT"), which became popular and widely used during the real estate boom, is under fire. The IRS announced that new regulations will be issued shortly which will end the use of PATs entirely for all transactions after October 18, 2006.

If you would like more information about the advantages of a Structured Sale, contact a licensed structured settlement broker at Kleinick Law today!

In an earlier article on June 1st in the Wall Street Journal (and by the same staff writer, Rachel Emma Silverman), troubling issues with Private Annuity Trusts were pointed out along with a brief comparison with Structured Sales and other plans.

Keeping the Tax Man at Bay

Sellers of appreciated property can choose from a variety of strategies designed to defer or cut capital-gains taxes. Here are some of the latest options:






Structured Sale


You accept a series of installment payments for your property, thereby spreading out capital-gains taxes over years. The buyer doesn't make the payments directly; he pays a financial-services firm to issue them. This firm assumes buyer's future payment obligations and pays the seller thereafter.


Structured sales are a modern twist on traditional installment sales. In a traditional installment sale, the buyer might default on payments. With a Fortune 100 financial-services firm guaranteeing the payments this problem is eliminated.

Private Annuity Trust


You sell assets to a trust in exchange for annuity payments that last the rest of your life. Whatever's left in the trust when you die goes to your heirs free of estate taxes.


Allows you to defer capital-gains taxes and reduce estate taxes. But the widely promoted tactic is controversial and longer passes IRS muster.

1031 Exchange


The strategy allows you to defer capital-gains taxes by selling one property and quickly buying another property of equal or greater value.


1031 exchages have grown very popular, especially for real estate, but they on ly work for commercial or investment assets, and there are strict rules and deadlines.

Charitable Remainder Trust


You put assets into a trust and receive a regular payment streatm. When you die, what's left goes to a charity, for which you recieve an upfront tax deduction.


This safe strategy can reduce capital-gains, income, and estate taxes, but might not do much for your heirs.

While a Structured Sale utilizes an annuity (and therein lies the confusion), it employs proven installment sales techniques that have been used for decades. According to tax attorney Robert Wood of Wood & Porter, a "Structured Sale is a blend of an installment sale and a guaranteed payment stream."

The Structured Sale is a powerful tool to close deals and make lifelong clients. It should not be confused with the now defunct Private Annuity Trust. Feel free to email or call Creative Capital.

If you would like more information about the advantages of a Structured Sale, contact a licensed structured settlement broker at Kleinick Law today!


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New York Birth - Kleinick Law
Medical malpractice lawyers in New York specializing in medical malpractice cases involving birth injuries and birth defects.Practicing throughout New York City (NYC), Brooklyn, Bronx, Queens, Staten Island, Manhattan and the surrounding areas.

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