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Warning: As of October 18, 2006 Private Annuity Trusts (PAT) are no longer recognized by the Internal Revenue Service (IRS) as legal means for managing assets tax deferred! The Private Annuity Trust has been replaced with The Ensured Installment Sale (Structured Sale), w

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

hich will be discussed later. The following information applies only to Annuity agreements funded prior to October 18, 2006, which are still honored by the IRS.

PRIVATE ANNUITY TRUST: WHAT IS IT?

A Private Annuity Trust works very similar to an Immediate Annuity, altho

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

gh you will use assets other than money to fund this Annuity. Typically, you transfer ownership of a home or land with high value to a Trust. The Trust agrees to make lifetime payments to you, and can then sell the asset you gave them and use the money to fund this Annui

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

y agreement through investments.

You cannot use other retirement funds such as a 401k to fund a Private Annuity Trust, but you can add multiple properties to increase your tax break and Annuity payment. If you decide to add an additional property to your Private Annuity

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

Trust you must create a new Annuity agreement for each property, unless your original agreement contained a provision to include additional assets at a later date.

Each new agreement will have a different deferral period which creates an added benefit to you by providin

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

both immediate and long term income. The withdrawal period from a Private Annuity Trust must begin by age 70 ?, but you can always choose to receive payments sooner.

When structuring a Private Annuity Trust, you must name a Trustee who will be responsible for controlli

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

g the investments of your assets in the Private Annuity Trust. The Trustee can be an adult child, relative, close friend, attorney, or anyone else other than you or your spouse. By law, the annuitant is not allowed to have any direct control over the investments of their

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

Annuity. You may make council to the Trustee but cannot have any direct contact with the assets once they are transferred into the Private Annuity Trust, and your transfer of ownership is irrevocable.

ASSETS TRANSFERRED TO A PRIVATE ANNUITY TRUST: HOW TO ESTIMATE THE A

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

NUITY PAYMENTS

It is fairly easy to estimate what your Annuity payments will be for the asset transferred into a Private Annuity Trust. The IRS uses the following factors to determine your payment:

1. Your life expectancy

2. The selling price of your asset

3. The Ann

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

al Federal Mid-Term Rate (AFMR) effective when your property was transferred (this rate will be the rate used for the duration of your Annuity)

4. The length of time you defer payments

Using these factors, the amount you will receive from an Annuity is a fixed amount a

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

d you cannot start and stop payments from a Private Annuity Trust. Once the withdrawal period begins you will continue to receive payments for life.

The “life expectancy” factor is only used by the IRS to help determine what your payments should be and is not to be conf

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

sed with a payment “cutoff” age. If you live beyond what the IRS factored as your life expectancy, you will continue to receive payments for life.

JOINT ANNUITY FOR SPOUSE TO RECEIVE PAYMENTS

Owning a joint annuity will allow your spouse to continue receiving Annuity p

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

yments should you die first. After your spouse dies, payments will cease and your beneficiaries will inherit any surplus money remaining in your Private Annuity Trust created by wise investment options of the Trust’s reserve.

By law there must be enough money set aside

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

or the Trust to fulfill its Annuity agreement with you, and there will usually be a reserve account established of five to ten percent of your asset’s value as a safety precaution. Remember, your Annuity payment is fixed and will not increase regardless of profit your as

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

sets create via the Private Annuity Trust.

NO ESTATE TAX, INCOME TAX OR GIFT TAX ON PRIVATE ANNUITY TRUST TRANSFER

When you establish a Private Annuity Trust, you are not subject to estate, income, or gift taxes. The transfer of ownership of an asset to a Trust is “pai

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

for” by the Annuity agreement. The IRS cannot accurately determine your life expectancy, and therefore cannot determine how many payments you will actually receive.

Taxes will be deferred on the transfer until you start receiving payments, and a portion of your payment

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

will be taxed based on your income amount. The transfer of ownership involving your assets is not considered a gift to the Trust because they are agreeing to pay you for the asset at a later date, and as a result you will not have to pay a gift tax.

Once your asset is t

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ansferred to the Trust, it is removed from your taxable estate. This is of particular benefit to your beneficiaries who will not be held responsible for paying estate taxes when they receive excess funds from your Annuity. After your death it is the responsibility of the

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

Trust to cover any unpaid taxes due on the assets.

ENSURED INSTALLMENT SALE (STRUCTURED SALE)

The Ensured Installment Sale was developed by the Allstate Insurance Company in 2005 and works in a similar manner to the Private Annuity Trust. The major difference between t

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

e two is that when you sell your assets, the Annuity is purchased directly from an insurance company. The insurance company, and not the Trustee for a Private Annuity Trust, is responsible for making investment decisions and ensuring you receive Annuity payments for life

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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If the contract is ending, and separation in inevitable, that's one thing; but when rumors of a layoff are wafting through the company, and they are walking around looking for candidates to fill up the lay off list, here is some information that may help you weather the storm.

Security is a huge issue for many businesses. This applies, not only to those that produce goods and have stock in storage warehouses or other similar buildings, but also regular offices that have expensive computer equipment and also those businesses that store personal and financial information of their clients and customers. Identity theft has become a huge problem, and the law requires companies that hold client and employee records to do so securely.

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