Can Family Limited Partnership (FLP) units be used with a contingent private annuity?
YES – the purchase price paid for the right to receive the private annuity can be made in cash or in kind. This means that if the trust owned life insurance, to the extent the payment to the trust exceeds the amount needed for life insurance, discounted FLP units can be moved from the taxable estate. Additionally, all of the growth on the transferred FLP units should be exempt from tax in the grantor’s estate. Does CPASS negate the need for irrevocable life insurance trusts? NO, not at all. CPASS is not intended to replace life insurance in irrevocable life insurance trusts. It is intended to augment the wealth that is being transferred from one generation to the next. What is a Private Annuity? A private annuity is a personal or restricted annuity. The major difference between private annuities and commercial annuities is that the person or entity that assumes the obligation for the private annuity payment is not in the business of selling annuities. A private annuity is an arrangemen
