NAFEP proposes private annuity trust replacement

FWR Staff

1 June 2007

Self-directed installment sale" to help clients defer capital-gains taxes. The National Association of Financial and Estate Planning has unveiled a new capital-gains deferral strategy called the self-directed installment sale . It's meant to replace the private annuity trust, which the IRS is proposing to de-tooth by regulating away its ability to help clients defer capital gains taxes on highly appreciated assets.

"More robust"

The SDIS strategy lets clients defer capital gains taxes on the sale of highly appreciated assets like real estate or business interests without the risk associated with a traditional installment sale. The deferral of taxes allows for the compounding of the monies over a client defined time period.

"This new capital gains deferral strategy has several benefits over the Private Annuity by offering higher pay outs with client self direction over the transaction," says NAFEP president Scott Janko. "This new strategy improves the benefit to the client, and we believe that the proposed regulations for Private Annuities as enabled us to see a way to develop a more robust capital gains deferral strategy."

Salt Lake City-based NAFEP is a 14-year-old non-profit that provides legal documents, structures and strategies to financial-planning and real-estate professionals. -FWR