My attorney (or CPA) has never heard of a private annuity, or doesn't think it is legal. What "proof" is there that this strategy is legitimate?

For the best and most complete information refer to the previous answer.

For a quick answer have your tax advisor review:

IRS Revenue Rulings 55-119 and 69-74, plus the IRS’ GCM39503 of 5/19/86 and Treasury Decision TD-8754 issued in 1998, and the Ninth Circuit U.S. Court of Appeals decision “LaFargue v Commissioner, 689 F.2d 845 (1982)”. (These rulings and decisions are included or summarized in the above mentioned Legal Package ).