“Transferring assets to a grantor trust in exchange for a private annuity can transfer a family legacy while providing the individual with a fixed income stream for life to manage lifestyle expenses. In particular, this planning may be considered for an individual who has a shortened life expectancy but is not terminally ill. A private annuity for life approach, however, requires additional planning to avoid the exhaustion test, which requires that the trust have sufficient funds to pay the annuity until the annuitant reaches age 110.”

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