The other two common options are to cash out or annuitize. For a non-qualified annuity a spousal continuation may be attractive if there have been significant earnings and deferring that taxable income would result in less total taxes than if she simply cashed out and paid the taxes all at once. You will have to read through the actual contract to see specifics of each option. Since the wife is the primary beneficiary, she can exercise any of the options the annuity contract provides. The beneficiaries would have to decide to put them there. The trust provisions only apply to assets held in the trust so if the designations don't direct an asset to the trust, the provisions of the trust won't apply unless and until the assets are put there. With annuities, and other types of accounts such as IRA's, 401(k)s, and life insurance where one can name beneficiaries, those beneficiary designations take precedence over the deceased's will or any trust. If your lawyer or your planner isn't interested in doing that, find ones that will. Your estate planning attorney and financial planner should coordinate their efforts. For all readers: This is why it is critical that your account titling and beneficiary designations jibe with your documents. Thank you for any thoughts in such a matter as this. Trust does not specifically name the annuities. Does beneficiary in annuity contact usurp the trust? My dilemma is: Should I do a spousal continuation on annuities or do I put them in the trust? Won't putting it them in the trust be a taxable event? I've had two different answers on this. And husband left a will with daughter as trustee. Husband set up an irrevocable trust for wife with only child (daughter) as trustee, to take care of wife who is in a facility.
Wife (age 72) is sole beneficiary of his annuities (both qualified and non-qualified). I am working on a situation where husband died a month ago (age 74). Thank you for a great column on inherited IRA's.
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