Many people say, “I want to sell my business (or
properties) and retire”. Now there is a way to
sell a business (or a piece of real estate), defer
the capital gain and get a secure stream of payments
to use for retirement or for any other purpose.
This is called an installment sale that been used
for years. Now there is a new way for future
tax-deferred payments to the seller to be funded
with an annuity from a large, highly rated life
insurance company. Also a large life company
will assure the future payments, not just the buyer.
The benefits are that are taxable gains are
deferred, a large life insurance company will
guarantee the obligor, the seller gets a guaranteed
rate of return, investment risks are minimized, and
there is long term financial security.
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For business owners there are several specific
advantages. The main one is that it allows
them to sell the business and not have to just
depend on the buyer for future buyout payments.
Sometimes a business owner may sell a
well-established company to a good prospect, only to
see it fail in just a few years after the sale.
Because future payments to the seller depended on
the company surviving, the prior owner now has to
come out of retirement, take over the firm, rebuild
it and resell it. With an installment sale
with an annuity company assuring the future
payments, this risk is eliminated.
Another advantage is the ability to defer capital
gains. Many business sellers started their
firms many years ago with very little capital.
This means that the sales price reflects a huge
capital gain tax problem. With an installment sale,
this capital gain may be deferred into the future
saving the seller enormous amounts of money.
The bottom line is many folks want secure,
tax-deferred, future cash payments when they sell
their business. An installment sale with an
annuity will achieve these goals. Please call
today to help you do this.
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