Pilley v. Harris CA4/1
This appeal arises from a dispute over the disposition of the estate of James E. Pilley (Pilley). Pilley was the sole shareholder of a business that operated two residential care facilities. In 2004, Pilley decided to sell one of the facilities and set up a trust, the Pilley Investment Trust (PITv1), to hold the proceeds of the sale, in order to reduce the taxes associated with the sale. Pilley transferred the real property of the facility to the trust and the trustees, Edward and Jayne Pilley, and sold the facility for $1.5 million. Pilley and the PITv1 trustees then executed a private annuity agreement (the PAA), by which the trustees agreed to assign back to Pilley the $600,000 that the trust had received as the down payment for the property, and to pay Pilley the remaining $900,000 from the sale in installments.
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