- 9 -
life expectancy of 8.9 years. Mr. Schulte further concluded that
it would be appropriate to use a 9-percent interest rate factor
in connection with the private annuity arrangement involving
decedent, as he believed 9 percent to be a slightly higher
interest rate than the prevailing interest rate currently charged
on land sale contracts in Arizona. He then consulted a loan
amortization table to learn what annual loan payment would have
to be made to amortize over 8.9 years a $1,865,500 loan paying 9-
percent interest per annum. The amortization table he consulted,
however, provided no information with respect to a loan for an
8.9-year term. As a result, Mr. Schulte examined the information
the table provided concerning a similar 9-year-term loan. From
that information, he computed that an annual loan payment of
$311,165 would be required to amortize a $1,865,500 loan over 9
years. Mr. Schulte thus concluded and advised Mr. Shadle that
$311,165 should be the annual payment made to decedent by her
grandchildren under the private annuity.
Decedent, Greg, Janet, Kimberly, and Lori entered into an
annuity agreement pursuant to which decedent would convey to each
grandchild an undivided one-fourth interest in her four parcels
of farmland, in exchange for the four grandchildren's agreeing to
pay $311,165 to decedent on September 1 of each year during her
life, beginning September 1, 1990. This annuity agreement, which
had been drafted by Mr. Shadle, states that the agreement was
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