A retired extended family member (age 70) will be inheriting a few indexed annuities in a trust as sadly his mom ( age 90+) is in hospice. His mom has dementia and he controls the trust now ( if “controls” is the right word). He is the sole heir.
I have a good understanding of an indexed annuities dismal performance from helping my sister dispose of a few she was sold years ago. The complicated performance matrix w/ the indexes they were tied to and the high account and sub account fees made them miserable investments. And if I remember right Without a step up of a annuities basis at death they weren’t great estate planning tools.
If I was going to list the considerations a retiree would have with regards to inheriting an indexed annuity they would be:
- they have high expenses fees / ratios
- they likely have low performance relative to indexes they are tied to
- when someone inherits one it’s tax treatment is not favorable (taxed at normal income rates)
- there could be surrender fees
- are there timed withdrawal requirements?
- there may be a life insurance element
- if in a trust I assume the trust tax return would pay the taxes at the higher trust rates?
Are there other considerations I have missed?
Are their moves my relative might consider w the indexed annuity before his mom passes away that might be legal and smart for him to do? The estate is in Florida and may be valued at 2-4 M.
Thanks for any experience and knowledge you can share.
I just now saw a recent post with some great info from stinky and others
viewtopic.php?t=407367
I have a good understanding of an indexed annuities dismal performance from helping my sister dispose of a few she was sold years ago. The complicated performance matrix w/ the indexes they were tied to and the high account and sub account fees made them miserable investments. And if I remember right Without a step up of a annuities basis at death they weren’t great estate planning tools.
If I was going to list the considerations a retiree would have with regards to inheriting an indexed annuity they would be:
- they have high expenses fees / ratios
- they likely have low performance relative to indexes they are tied to
- when someone inherits one it’s tax treatment is not favorable (taxed at normal income rates)
- there could be surrender fees
- are there timed withdrawal requirements?
- there may be a life insurance element
- if in a trust I assume the trust tax return would pay the taxes at the higher trust rates?
Are there other considerations I have missed?
Are their moves my relative might consider w the indexed annuity before his mom passes away that might be legal and smart for him to do? The estate is in Florida and may be valued at 2-4 M.
Thanks for any experience and knowledge you can share.
I just now saw a recent post with some great info from stinky and others
viewtopic.php?t=407367
Statistics: Posted by Parkinglotracer — Wed Apr 10, 2024 3:37 am — Replies 0 — Views 65