Structured Installment Sales
what is a structured installment sale?
A Structured Installment Sale is a financial transaction in which the seller receives payment for their asset over an agreed-upon period of time, rather than as a lump sum. The funding vehicle can be an annuity, treasuries, or a market-based investment and may include an upfront lump sum and regular payments over the term of the agreement. The terms of a Structured Sale are typically tailored to meet the needs of the seller and may include conditions such as the amount of each payment, the length of the payment period, and the interest rate. Structured Sales are commonly used in real estate and business transactions, as well as in estate planning. They provide a way for the seller to receive a steady stream of income over time and can be a useful tool for managing tax liability — capital gains taxes are deferred when a Structured Sale is used.
what are the financial benefits of a structured sale?
There are several financial benefits of Structured Sales:
Periodic Payment: Structured Sales allow the seller to receive payment over an extended period of time rather than as a lump sum. This can be beneficial for sellers who need to generate income and cash flow.
Tax Deferral: Structured Sales allow the seller to defer taxes on the deferred amount until the payments are received.
Reduced Risk: Structured sales provide a predictable stream of income, reducing the risk of market fluctuations that can negatively impact a lump sum payment.
Customization: Structured sales can be tailored to meet the specific needs of the seller, including the amount of each payment, the length of the payment period, and the interest rate.
Estate Planning: Structured sales can be used as a tool in estate planning, allowing the seller to pass on periodic payments to their heirs over time rather than just a lump sum payment.
Structured sales provide a flexible and customizable way for the seller to receive payment for their assets while reducing risk, increasing cash flow, and deferring taxes.
who can utilize a structured sale?
Any individual, entity, or estate owning real estate or a business can benefit from a Structured Sale.
To participate in a Structured Sale, the seller must have a buyer who is willing to purchase the asset, assign the liability to make periodic payments to an assignment company, and agree to the terms of the Structured Sale. The buyer must also have the financial capacity to make the initial/premium payment as agreed.
In order for a Structured Sale to be a viable option, the asset being sold must have a value that can be realized. The terms of the Structured Sale must be compliant with relevant laws and regulations.
We can help you determine if a Structured Sale is right for you.
