What is a Self-Canceling Installment Note (SCIN) primarily used for?

A Self-Canceling Installment Note (SCIN) is primarily used in the context of transferring assets, often involving family members. It is a financing tool used to sell an asset while allowing the seller to receive payments over time. The unique feature of a SCIN is that it "self-cancels" upon the death of the seller, meaning that if the seller dies before the note is fully paid, the remaining debt obligation is forgiven. This can create tax advantages, as it allows the seller to transfer appreciation of the asset without it being included in their gross estate for estate tax purposes.

The use of a SCIN is particularly beneficial in family transactions, as it helps achieve the goal of passing wealth to heirs efficiently while mitigating the tax implications typically associated with outright gifts or sales. By structuring the sale as a SCIN, family members can facilitate a transfer of property that aligns with their estate planning objectives while also allowing for a structured means of payment.

This makes the first option the most relevant and contextually accurate response in understanding the primary use of a Self-Canceling Installment Note in estate planning.