What if the XYZ Firm’s investment performance is equal to or less than the IRS interest rate?

If the XYZ Firm’s annual compounded investment return equals the IRS interest rate, then the Grantor’s annuity interest will be fully paid, but there will be only a small remainder in the XYZ Firm to pass on to the Donor’s children. If the XYZ Firm’s annual compounded investment return is less than the IRS interest rate, then the trust principal will be exhausted before the end of the XYZ Firm term. There will be no tax savings, but nothing will be lost except the time and expense associated with establishing and maintaining the XYZ Firm.