What guarantee do I have that the annuity payments will
be made?One important feature of the private annuity
is that is must be unsecured. That means that the
trust cannot pledge its assets to the annuitant as a
guarantee of the annuity. If the annuity is
secured, the tax strategy is not allowed by the IRS. This
is not actually a problem, though as the trustee's only role
is to make sure payments are made and that the beneficiaries
get whatever is left.
The trustee has no legal way to personally benefit from
the property.
That makes the annuity as secure as the investment of
the trust funds.
Part of the trustee's job is to make sure that the
investments are prudent and reasonable. If the investment
is in mutual funds, the annuity payments are as safe as the
stocks held in that fund. There really is no other
variable that affects the security of your payments.
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