PRIVATE ANNUITY AGREEMENT FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION. Specimen documents are made available for educational purposes only. This specimen form may be given to a client s attorney for consideration as a sample document, when requested. This specimen form shall not be given to a client. This document should not be used as drafted. It has not been adapted to the specific circumstances or objectives of any individual client, nor has it been prepared to meet the legal requirements of any particular state. Clients should be advised to seek legal counsel when entering into any transaction and in the preparation of all legal documents. All formalities required under applicable local law should be observed. Caution: The funds required to comply with this agreement should be carefully calculated, and a funding source secured. Caution: Proposed Regulations issued by the IRS on October 17, 2006 would change the taxation of private annuities to require the annuitant to realize any gain in the year the transfer is made rather than spreading the gain over the annuitant s life expectancy. ***** PRIVATE ANNUITY AGREEMENT THIS Private Annuity Purchase Agreement (hereinafter "Agreement") is entered between (hereinafter "Seller") and (hereinafter "Purchaser"), this day of, 20. WHEREAS, Seller wants to assure an income for life, and WHEREAS, Purchaser wants to purchase property owned by Seller NOW, THEREFORE, Seller and Purchaser do agree as follows: 1. To assure a fixed and reliable (monthly or annual) income for the remainder of (his or her) natural life, Seller agrees to sell, transfer, convey, set over and assign to Purchaser the property more particularly described in Exhibit A, attached to and made a part of this Sample Document - Page 1 of 5
Agreement, in exchange for an annuity of equal value as determined under appropriate actuarial tables prescribed by the Internal Revenue Service, which calculations are set forth in Exhibit B, attached to and made part of this Agreement. 2. In consideration of the sale, transfer, assignment, conveyance, and delivery to (him or her) of the above-described property, Purchaser agrees to pay to Seller the sum of (dollar amount in words) dollars ($ ) per (month or year) for and during the full term of (his or her) natural life, such payments to begin on (month, day, year). It is expressly agreed that these payments are for the life of Seller only, and will terminate upon the death of Seller, without any further obligation by Purchaser, except to make a prorata partial payment for the month (or year) in which the death of Seller occurs, such payment to be made to such beneficiary as Seller may designate in writing, or, in the absence of such designation, to Seller's estate. 3. It is expressly agreed that Seller has only an unsecured right to the payments from Purchaser, which are not secured by any mortgage, lien, pledge, or other security interest in the property transferred by Seller. 4. It is expressly agreed that Purchaser's obligation to make the payments shall not be subject to, or in any way affected by, the future value of the property transferred, or the amount of income it produces or fails to produce. 5. If any payment is made by Purchaser more than seven (7) days after the due date, then interest shall be paid on such late payment at the simple rate of percent per year. 6. Purchaser's obligations to make the payments due under this Agreement are binding on the heirs, assigns, and personal representatives of Purchaser; however, neither Purchaser nor any other person or entity may transfer this obligation without the express written consent of Seller. Irrespective of any such transfer with the consent of Seller, Purchaser shall remain liable for such payments as a guarantor. 7. Seller's rights to the annuity payments are personal to Seller and may not be sold, assigned, transferred, or conveyed by Seller. 8. The valuation of the property exchanged pursuant to this Agreement for an annuity of equal value was determined by means of an appraisal by an experienced and certified appraiser, which appraisal is attached to and made part of this Agreement as Exhibit C. Sample Document - Page 2 of 5
[Note: If closely held shares are transferred in exchange for the private annuity, and these shares are subject to a buy/sell agreement, that fact should be recited here, and a copy of the agreement attached to and made part of this Agreement as Exhibit D. Compliance with restrictions on transfer should also be documented as part of this exhibit.] 9. This Agreement may be altered or amended only by a writing executed by the parties. 10. This Agreement represents the final and entire Agreement between the parties, and supersedes all prior or contemporaneous agreements, express or implied, written or unwritten. 11. If any part of this Agreement is held to be invalid or otherwise unenforceable, the remainder of the Agreement shall continue in force and effect to the full extent permitted by law. IN WITNESS WHEREOF, the parties have set their hands and seals hereunto this (day) of (month), (year). SELLER (typed name of Seller) PURCHASER (typed name of Purchaser) Sample Document - Page 3 of 5
In the presence of: (typed name of witness) ***** Sample Document - Page 4 of 5
This information is provided by American General Life Insurance Company (AGL) and The United States Life Insurance Company in the City of New York (US Life), members of American International Group, Inc. (AIG). All companies mentioned, their employees, financial professionals, and other representatives, are not authorized to give legal, tax, or accounting, advice, including the drafting or execution of any legal document. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. AGL and US Life shall not be liable for any loss or damage caused by the use of, or reliance on, the tax, accounting, legal, investment or financial items contained in this material. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION 2017-2018. All rights reserved. Sample Document - Page 5 of 5