Model Installment Sales & Intra-family Loans in Your Client’s Estate Waterfall

A critical tool for wealth transfer & tax planning

Installment sales and intra-family loans are powerful estate planning strategies that enable tax-efficient wealth transfer while preserving family legacies. However, bringing the benefits to life requires rigorous modeling to ensure they align with the client’s long-term goals and comply with evolving tax regulations.

Historically, advisors have relied on spreadsheets to analyze these strategies—manually updating asset values, adjusting assumptions, and stress-testing variables. This approach is time-consuming and prone to errors, making it difficult to adapt to changing market conditions and IRS-prescribed Applicable Federal Rates (AFR).

Luminary’s modeling tools replace this fragmented process with an integrated solution. Now, advisors can create and evaluate these strategies dynamically within a client’s estate waterfall, seeing the full picture in real time.

A smarter way to model sales & loans

By embedding installment sales and intra-family loans directly within the estate waterfall, Luminary provides a dynamic, visual representation of their impact. Advisors can instantly compare how these transactions shift wealth, affect tax liabilities, and alter cash flows across entities.

The system automatically calculates key outcomes, such as the effect on both the seller/lender and recipient, potential tax savings, and the long-term value of the transaction. Instead of manually updating spreadsheets, advisors can make quick adjustments to key variables—including asset growth rates, loan terms, and estate tax assumptions—without rebuilding models from scratch.

Assessing the right strategy for each client

Determining whether a sale or loan strategy makes sense requires a holistic view of the client’s estate. With Luminary, advisors can immediately see how much wealth is transferred out of the estate, how much remains, and what the projected estate and gift tax impact will be.

Additionally, the tool helps answer critical structuring questions:

• Does the proposed transaction align with the client’s goals?
• Can the borrower or purchasing entity support the required payments?
• Is the transaction structured appropriately to withstand IRS scrutiny?

With clear visual outputs, advisors can confidently guide clients through these considerations, ensuring each strategy is designed to maximize impact while remaining compliant.

Making complex planning more client-friendly

Estate planning is intricate, but clients need clarity. Luminary’s visualization tools help bridge the gap, making it easier to explain different scenarios and their implications. Instead of presenting dense spreadsheets, advisors can walk clients through the potential outcomes in an intuitive, interactive format, and enable informed decisions by illustrating best-case, expected-case, and worst-case scenarios.

Start modeling sales & loans for your clients today

Sale and loan analysis is now live within Luminary. Get started by creating a hypothetical transfer within your client’s estate waterfall—our intuitive interface will guide you through the setup, instantly generating a visual analysis.

Want to see it in action? Submit your information here for a customized demo.

FAQ

Can I model an installment sale or intra-family loan to a trust that doesn’t exist yet?

Yes, in Luminary you can set up transactions to either existing trusts, or hypothetical "draft" entities. You can also model gifts to hypothetical entities, to simulate "seeding" the trust prior to selling or lending assets.

Can you model the sale of FLP or LLC ownership using Luminary?
Yes, in Luminary you can select specific ownership interests in business entities in sale transactions.

How does Luminary quantify the benefit of a sale or loan transaction?
Luminary quantifies the amount of growth transferred out of the seller/lender's estate over time, as well as the associated implied estate tax savings from transferring this wealth outside of a family's taxable estate.

Does Luminary allow for customization of sale & loan transactions?
Users can customize a number of transaction details, such as payment structure (amortizing, interest-only, etc.) as well as term and repayment options.