The Structured Sale program, which is a tax management strategy, can provide a layer of asset protection for the Seller. Since the Seller receives guaranteed periodic payments according to the installment sale agreement from the third party assignment company, he/she never has constructive receipt, thus doesn't own anything. In other words, the Seller does not have control of the sale proceeds until he/she actually receives a payment; and then it's still only for the amount received, not the balance due. Therefore, if anyone wanted to sue for assets, the monies held by the assignment company could not be included in the lawsuit.
For Example: Tom sells a property and uses the Structured Sale for $1,000,000 of the sale proceeds. As part of the agreement he is to receive $125,000 each year for 10 years (the $25K is interest). The Buyer transfers the on-going payment obligation and $1 million to a third party assignment company, who then invests the proceeds in a specially designed annuity to match the agreement. Tom is contractually guaranteed to receive $125,000 per year, but he doesn't own the annuity, the assignment company does, and he doesn't have access to the $1,000,000, only the $125,000 payment stream.
A year goes by, things are going well, and suddenly Tom is served with a lawsuit by a past associate for $500,000 in damages (you can make up the reason and the outcome). The point is that Tom's sale proceeds within the Structured Sale are not his property and should be protected from the lawsuit. It's another great advantage of the program. Since I am not an attorney, this is not intended as legal advice and individuals should consult an independent legal advisor.
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