4structures.com LLC works with buyers and sellers of highly appreciated real estate and eligible owners of highly appreciated business interests, real estate lawyers, real estate agents, real estate brokers and business brokers to facilitate structured installment sale transactions as part of several real estate and business exit strategy solutions the company offers.
An Installment Sale offers an opportunity for an eligible Seller to defer recognition of some or all of the gain on a disposition of qualified property. The Seller must be eligible to report the sale of property or business pursuant to IRC §453. The qualified property, subject to the installment sale could be piece of highly appreciated real estate or property, or an interest in a business or professional practice. For a sale to constitute an Installment Sale, it must be a sale of qualified property where the Seller receives at least one payment after the tax year of the sale.(1)(2)
Each installment payment received by the Seller consists of the following three components: (a) nontaxable recovery of the investment (b) taxable gain, and (c) interest .(3)
The Structured Installment Sale provides guaranteed income for qualifying property or business sales that are eligible for the installment method under Internal Revenue Code §453
A traditional installment sale arrangement has the Seller dependent upon the financial solvency of the Buyer for future periodic payments that the Buyer owes to the Seller. Since the Installment Sale permits the Seller to take payment in the form of a periodic payment, the Seller could potentially be at risk if the creditworthiness of the Buyer is suspect at the outset, or later deteriorates. To mitigate this credit/default risk, the Seller and Buyer can instead agree to consummate a "Structured Installment Sale". A structured installment sale is also known as a structured sale.
No, a structured installment sale is not an annuity in the same way a structured settlement is not an annuity. Both instances involve an agreement or promise to make future periodic payments as consideration for a settlement of claims or disputes, or for the transfer of personal or commerical real estate or a business interest (structured installment sale) . An annuity is the most common financial product used to fund a structured installment sale.
1. Metropolitan Tower Life Insurance Company ("Metropolitan Tower Life" or "MetLife") offers a fully domestic structured sales solution through select brokers and agents, including John Darer of 4structures.com LLC. The Metropolitan Tower Life product allows for business and real estate sales to be paid out in periodic payments, the obligation for which will be transferred, by the buyer, to MetLife Assignment Company, Inc. (MACI), which is domiciled in Delaware. MetLife Assignment Company will in turn purchase an annuity from Metropolitan Tower Life Insurance Company to fund the future obligation to the seller. Metropolitan Tower Life also guarantees the performance of MACI. Metropolitan Tower Life Tower Structured Installment Sale solution is available in 49 states (all states except New York) Applications for use include (1) Real Estate Sales or Personal Property (e.g. a home) (2) Commercial Property (e.g. an office or apartment building, a retail store, gas stations, farmlands, etc.) (3) Sale of a business or practice (e.g. CPA/accounting, dental, medical or veterinary practice). Please note that Metropolitan Tower Life has a $500,000 minimum. Payments must begin by the 13th month to comply with IRC 72(u). Maximum payout duration is 40 years of future payments. Payments can be structured with a fixed COLA of up to 3%. Scroll down to see Met Life structured installment sale flow chart and read John Darer's blog on MetLife Structured Installment Sales.
2. Independent Life Insurance Company has two annuity backed structured sale solutions.
Independent Life product will allow for business and real estate sales to be paid out in periodic payments, the first position obligation for which will be transferred by the buyer, to Structured Assignments, SCC (domiciled in Barbados). The chosen Assignment company will in turn purchase a fixed annuity from Independent Life Insurance Company to fund the future obligation to the seller. Can do immediate and deferred start dates of beyond one year. Indepndent Life Insurance Company does not do business in New York.
Independent Life has an alternative structured installment sale funding solution for those with an intermediate or long-term horizon, where the first position obligation is transferred by the buyer to Dominion Assignment Company (Switzerland) SPC Limited, registered in the Cayman Islands, which is managed and controlled in Switzerland by Dominion Fiduciary Services (Switzerland) SA, a licensed and regulated Swiss trust company ("Dominion Trust") in accordance with the US-Switzerland tax treaty. The Dominion Group is one of the leading providers of innovative and compliant solutions in Private Wealth, Pensions and Trust & Corporate services from within Europe, the United States of America, and the United Kingdom. The obligation transferred to Dominion Assignment Company is funded by an uncapped iStructure fixed index structured annuity issued by Independent Life Insurance Company that has payment adjustments tied to changes in the Franklin BoFA World Index.
3. American Equity Life Insurance Company
Their SPIA is another annuity backed structured installment sale option, when using Structured Assignments, SCC as the non-qualified assignment company.
4. Havelet is an independent assignment company with another structured installment sale method. With Havelet, the installment periodic payment obligation is assigned by the buyer, to Havelet Assignment Company, a non-qualified assignment company domiciled in Barbados, with the fixed option backed by a private placement annuity and another market-based option with an annuity wrapper. Can do immediate start date as well as deferred start dates of beyond one year.
With one structured sale method, the installment sale agreement provides that the installment periodic payment obligation will be transferred, by way of non-qualified assignment to Structured Assignments, SCC, a third-party special purpose non-qualified assignment company and, will be funded by the purchase of United States Treasuries held in trust. The Assignee has established an irrevocable trust, with Midwest Trust Company for the purpose of naming a trustee to hold United States Treasuries to better fulfill its obligations to the Seller. Moreover, Midwest Trust Company issues a Keep Well Agreement [download sample]. This may help provide far greater assurance to the Seller that he or she will receive the future periodic payments when scheduled and achieve the intended tax deferral. Need a visual?
Simply scroll down to see
Structured Installment Sales Flow Chart below.
The following items cannot be disposed of with a structured installment sale
Answering "Yes" to any of the above questions means you (or your client) could benefit from a Structured installment Sale. Please contact us to discuss your specific needs. We Know Structured Sales®
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Last updated December 24, 2023
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4structures.com, LLC
The Structured Settlements and Settlement Planning Company
43 Harbor Drive, #309 Stamford, CT 06902 USA
888-325-8640
646-849-1588
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Property, Attorney Fee Deferrals, Funding Agreements, Structured Installment Sales, Environmental Liability and Commercial Dispute settlements.
Structured settlements and structured settlement brokerage, settlement planning, Sudden Money®, financial transitionist, funding agreements and insurance related services provided by 4structures.com LLC.
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