Consequences of Reducing the Principal and/or Interest of a Note Issued in an Intrafamily Sale by a Grantor Trust
(The Florida Bar Journal Volume 83,No. 11)
This article focuses on reducing the interest rate of an intrafamily sale installment note due to the decline in the applicable federal rate subsequent to such sale. In addition, this article reviews the tax law and decisions in reducing the principal indebtedness of such note when the property that was sold has subsequently declined in value. There is little tax law on this issue so it is cutting-edge and it is a controversial subject among sophisticated estate planning attorneys. This planning should be considered by anyone that has done a sale to a grantor trust pursuant to an installment note and the property that was sold has substantially decreased in value.