Until now, a selling party had little option on the sale of their personal residence, and only a handful of options on the sale of investment properties, raw land or commercial real estate. Private Annuity Trusts, TIC`s, Charitable Remainder Trusts and 1031 Exchange are all well known, but carry some drawbacks with their execution and administration, not the least of which are the significant costs of setup and annual management.

      While not the panacea to every situation, a new and exciting product, the Structured Sale, is rapidly growing in popularity. The Structured Sale is providing an opportunity to avoid immediate tax liability and grow funds in a customized manner they design.

     The Structured Sale Annuity takes advantage of two IRS Revenue Rulings (82-122 & 75-457) and allows a selling party to place any portion of their proceeds into a fixed annuity product with a guaranteed yield and rate of return paid back to the seller. Unlike traditional annuities, however, the new Structured Sale Annuity product offers unprecedented flexibility in how the guaranteed funds are paid out. The individual can truly design the payment schedule to meet their unique financial needs. Monthly, quarterly, semi-annual or annual payments are all available, as are future lump sums in any combination.  The client has the choice of starting payments immediately (regardless of their age) or deferring payments for up to 20 years, maximizing the growth and creating a subsequently higher yield on the back end. This is a great tool to help supplement retirement, fund a college education for children or grandchildren or provide for future lump sums that can be used to take advantage of other investment opportunities or help pay large estate tax burdens.

     While all of these advantages are exciting in and of themselves, perhaps of greater importance to the Seller is the fact that a guarantee period can be placed on the payment schedule, ensuring that the annuitant`s Estate will continue to receive funds for as long as 40 years, even if they are deceased. Moreover, this product offers guaranteed financial security, allowing the client to be more aggressive with other investment opportunities. Best of all, the payments are guaranteed by a leading life insurance company with an A+15 rating by A.M. Best., and are taxed at a deferred ordinary income rate, in accordance with form 6252 of the IRS.

     If I represent the buyer in a transaction, the Structured Sale offers an opportunity to purchase property at a lower figure, offering the seller all of the aforementioned benefits and most important - leaving vital working capital for your client to make the necessary improvements they wish to make with the home or property. If the buyer has a Home to sell in another part of the country I will refer them to the correct place to have a Structered Sale.

     Does the concept of the Structured Sale Annuity seem too good to be true? There are indeed some restrictions imposed by the IRS, but they are all manageable. In order for the benefits described herein to be realized, the seller must avoid constructive receipt of the funds. The Buyer, at the Seller`s request, will direct appropriate funds to be sent from the escrow account - to the assignment company owned by the life insurance company. The Assignment Company in turn purchases the identified annuity and promises to make all future periodic payments to the Seller. A simple one page sales agreement between the Buyer and Seller includes the necessary language allowing for the structure, with the terms of the agreement governing the payment schedule.

     As the minimum premium the life insurance companies will accept is a mere $100,000. I am   happy to provided my client a wonderful service to consider  a Structured Sale benefit analysis as part of their sale. There are no associated charges, ever, with the purchase or management of the funds by the life insurance company or the broker placing the annuity - a further benefit over the aforementioned PAT`s, TIC`s CRT`s and 1031 Exchange.