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What’s the Difference???
By meligan | February 14, 2007
What’s the difference between an Ensured Installment Sale (EIS) and a Private Annuity Trust (PAT)?
Well, the short answer is: the PAT no longer works, and the EIS does.
But why?
Well the main difference, is that the PAT fails because ownership in one asset (real estate, business) is ultimately being exchanged for ownership of another asset (an annuity policy).
With the EIS, the seller of property or a business is receiving ONLY the promise of the future annuity payments, not ownership of the annuity itself. However, the promise of the annuity payments is provided by a MAJOR U.S. Life Insurance Company, who issues the annuity.
So who owns the annuity policy?
An international third-party assignee company assumes the liability of the buyer, to the seller, created in the installment sale agreement between those two parties. The MAJOR U.S. Life Insurance Companies that provide the annuities that are used to fund these transactions, also issue Letters of Guarantee backing the full performance of the assignee companies. Copies of these letters are available upon request.
Topics: Structured Sale, Random |