| This is one of the most frequently asked questions of | | | | your IRS life expectancy), or pass to your heirs upon |
| those considering the Private Annuity Trust. As with | | | | your death.If your trust loses large sums of money |
| almost all things financial, there is no one single right | | | | while invested in volatile investments, it is very possible |
| answer.For instance, if you attend a seminar | | | | that the trust will run out of funds before completing its |
| presentation sponsored by persons wearing thousand | | | | obligated series of payments. This means money you |
| dollar suits, you may hear that your funds should be in | | | | are counting on to live on is no longer available. Many |
| stocks, bonds, mutual funds, etc. where they project | | | | people fear outliving their money, and chances are |
| double digit annual increases by taking advantage of | | | | there is little chance to replace this income in later life.If |
| their financial prowess.This often sounds tempting, as | | | | the trust is burdened by heavy money management |
| of course, you want your funds to grow by leaps and | | | | fees and its own annual tax burden if the funds earn |
| bounds. These advisors also want to have your | | | | taxable annual income, this can dilute the earnings as |
| money to actively manage, as they earn their living | | | | well.So, there are very good reasons commercial |
| from management fees and commissions.If you are | | | | annuities from A rated insurance carriers make sense |
| young enough, and have some funds you want to | | | | within a PAT.1. Tax deferred income within the trust. |
| allocate to more volatile investments with the possibility | | | | The trust itself does not have annual taxable income.2. |
| of large returns, this strategy can sometimes do well | | | | The principle is protected from loss and insured by the |
| for you over time.It is the opinion of this author that the | | | | reserves from the insurance company.3. Annual |
| Private Annuity Trust is not the correct vehicle for | | | | management fees are kept to a minimum, as is |
| investments that can lose principle. It is the trustee who | | | | administrative accounting.4. Historical rates of return |
| has the fiduciary responsibility to invest the funds so | | | | support the current FMT rates over time.It's not to say |
| that the trust can provide the required payments to | | | | that a few other types of investments don't have their |
| the annuitant for the entire amount of time the trust | | | | place according to the age of annuitant, other outside |
| has been established for. This is their only obligation | | | | holdings, deposit amount, proportion and circumstance. |
| and it should be taken seriously.What many do not | | | | But, the key word that should be associated with the |
| realize, is that the payments the annuitant receives are | | | | placement of funds within the Private Annuity Trust is |
| based on the Federal Mid-Term Rate in force in the | | | | "Prudent".Save the gambling for your favorite casino in |
| month the trust is established. They are fixed once | | | | Vegas.Paula Straub will help you understand the |
| they begin, and remain so throughout the life of the | | | | Capital Gains Tax Saving Strategies you need to keep |
| trust.So, even if the trust made 20% every year, the | | | | your capital gains working for you. Get your free |
| payments to the annuitant do not change. The extra | | | | report "Seven Secrets to Help you Hang onto Your |
| monies remain in the trust to either continue payments | | | | Capital Gains" at the Keep Your Capital Gains website. |
| past the normal end of the trust (such as if you outlive | | | | |