Private annuities are powerful tools. They give the parents a guaranteed income for as long as either one of them is alive. In exchange, the assets transferred are immediately excluded from the parents’ taxable estates.
There are shortcomings, of course, if the transaction relies solely on a private annuity, i.e., if the income from the properties increases over the parents’ remaining lives, the parents will not share in that increase. However, that shortcoming can be ameliorated by pairing the private annuity with a promissory note. Kite will make it easier for practitioners and taxpayers to rely on this important structure.
Bruce Givner has practiced tax law for more than three decades and is president of Givner & Kaye, based in Los Angeles. He specializes in income tax planning, estate tax planning, asset protection, sophisticated retirement planning, tax litigation, charitable giving and more. Givner represents high net worth individuals and families, including A-list celebrities. In addition, he is frequently called upon by other attorneys, financial planners, accountants, and investment and insurance professionals to consult on their own clients.
