Estate Planning - Private Note transfer to heirs?

[Matt A.]

I am looking at getting some private funding which will probably end up being a 15 year note. The person providing the money is older (87 years old) and his a net worth of over $5 million.  He wants to set up the note to transfer to his heirs after he passes away to continue to provide a monthly income stream to then.  

Has anyone done this type of thing before and is it pretty straightforward to set up with his estate planning attorney?  Will he and/or his heirs get hit hard by taxes doing something like this?