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Annuity of Grandma

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  • Avatar Golfer68 
    Participant
    Status: Physician
    Posts: 64
    Joined: 02/08/2017

    My Grandma is 94 and dying, it is sad for us, but not for her . . . she lived through the depression and doesn’t need/want to be here anymore

    I am her closest relative and me and my wife make $450,000 per year and have one 2 year old daughter.  She has other relatives that are close but not as close as me.  She, nor my family need the money and we want to avoid taxes (she served in world war II and doesn’t feel she needs to give uncle sam much more) . . .

     

    It is a “non-qualified” annuity with an “accumulated value” of 35k and a “surrender value” of 35k.  What is our best option here? Name me as beneficiary? my daughter? family that is close and makes less?

     

    Thank you!

     

    #214284 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3022
    Joined: 01/14/2017

    What does she want to do?

    #214306 Reply
    Avatar Golfer68 
    Participant
    Status: Physician
    Posts: 64
    Joined: 02/08/2017

    she doesn’t want to deal with it and doesn’t want to pay taxes/fines, besides that doesn’t care

    #214315 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3614
    Joined: 01/08/2016

    So the gain is 0? What does it matter then?

    #214319 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 426
    Joined: 06/18/2018

    You say you don’t need the money.

    So, I guess you have no mortgage, your kid has $1M in a college fund, and you and your wife just work for the fun of it, right?

    If not all of those things are true, tell grandma thanks and be grateful for a small windfall. It’s got 0 gain, so no tax issues.

    #214337 Reply
    Avatar Insurancepro 
    Participant
    Status: Financial Advisor, Insurance Agent
    Posts: 26
    Joined: 03/26/2019

    We can’t tell what the gain is based on the info provided. If she doesn’t want to deal with it she should name you the beneficiary. You can’t avoid taxes if there is a gain but you can stretch them out. Based on the relatively small numbers you’d probably just want to take a lump sum.

    #214346 Reply
    Liked by jfoxcpacfp
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 357
    Joined: 06/12/2017

    You will owe taxes on the gains, meaning on the value above her cost basis. However, if you don’t need the money and don’t want the tax bill, maybe a fitting tribute to grandma would be to donate the annuity to charity?

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    http://www.fswealthadvisors.com | (717) 496-0900

    #214431 Reply
    Hank Hank 
    Moderator
    Status: Attorney
    Posts: 1190
    Joined: 03/27/2017

    You will owe taxes on the gains, meaning on the value above her cost basis. However, if you don’t need the money and don’t want the tax bill, maybe a fitting tribute to grandma would be to donate the annuity to charity?

    Click to expand…

    Wow, that really sounds like letting the tax tail wag the net income dog.

    #214463 Reply

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