Installment sale to a trust can deferred capital gains taxes?

[Gary Johnson]

I am ready to cash out of a highly appreciated property.  My attorney put together a plan he is confident will work but I believe this is the first time he has done this so I am reaching out to all of you for critique.  I've done my due diligence and can't find anything preventing this but I'm a bit nervous.  This is part of an overall estate plan to ulitmately benefit heirs.  Here's a brief summary of the plan.

Husb/wife (Holders) own property in a LP. A new LLC is created which is owned by a newly created non-grantor trust. The trustee is a true third party (likely our financial planner/investment advisor). The beneficiaries will be our children or their trusts. Ownership is transferred to the LLC/trust in exchange for a long term interest-only installment loan. Term is for 15 years but may be extended at option of Holders. Interest rate is set to the long term AFR (~3%) but I may decide to set it higher. The trust immediately resells the property to a 3rd party buyer for cash. The cash is invested in equities, bonds, commodities, etc. by the trustee. The investment generates a cash flow that equals or exceeds the payments on the loan to the husband/wife (or their LP). Since the husb/wife sold the property on an interest-only installment note, there is no income tax or capital gains tax due. Since the trust resold the property at the same price it acquired it from the husb/wife, there is no taxable event. No capital gains tax is due from the husb/wife until principal is repaid to them. It is anticipated that over time, the net worth of the trust will increase. I may be designated as manager of the LLC (but not an owner/member) so I can oversee the appropriateness of the equity investments.  I see this as a way to provide a larger income stream to husb/wife while beginning to build assets for heirs.

Comments are appreciated.  Do you think this will work?  If not, why not?  Please cite a code section or IRS ruling to support your dissent if at all possible.

Thank you,

Gary