Definition of Private annuity:
A private annuity is a special agreement in which an individual (annuitant) transfers property to an obligor. The obligor agrees to make payments to the annuitant according to an agreed upon schedule in exchange for the property transfer.
Private annuities are not an industry standard necessarily but may be used in various scenarios often involving inheritance planning, business succession, or asset protection. Agreement contract provisions are created and agreed to by both parties. For the agreement to be classified as a private annuity, neither party can be in the business of selling annuities—that is, neither party can be an insurance company. The agreement may or may not include provisions for beneficiaries.
Tax shelter in which capital gains taxes are deferred on the sale of assets that have appreciated in value. The proceeds from the sale are placed in an annuity that pays generally over the life of the annuitant.
How to use Private annuity in a sentence?
- In 2006 the IRS effected regulations that require capital gains taxes on the sale of any asset to the obligor at the time of the transferring transaction.
- A private annuity is a special agreement in which an individual transfers property to an obligor who agrees to make payments to the annuitant.
- Private annuities are commonly used in a private annuity trust, where the advantages offer a simplified trust setup to make annuity payments to beneficiaries as an inheritance.
Meaning of Private annuity & Private annuity Definition