ATTORNEY NEWSLETTER
Complications on Death of Annuitant
Tax Consequences for Heirs
Our annuity and financial elder abuse lawyers advise avoiding deferred annuities because they are complicated, expensive, tie up your money for years, and often do not produce the advertised returns. The complications and adverse tax consequences may not fully arise until the death of the annuitant, and the results can be a significant economic loss for the surviving spouse or heirs. The San Francisco annuity, securities fraud and financial elder abuse attorneys at Evans Law Firm, Inc. represent[1] individuals who have lost retirement savings in annuities, life insurance, and other unsuitable investments. Most of the victims we represent are seniors or the heirs of senior policy owners. If an agent or broker has sold you or a family member an inappropriate product such as life insurance or an annuity and you or other policy owner is over 60 and lives in California, call us today at (415441-8669 and we can help.
The basic death benefit offered under a deferred annuity is a guarantee that after your death, the insurance company will pay your beneficiary at least the amount you put in (reduced by whatever you have taken out). But that doesn’t sound like much of a benefit, so most carriers offer an “enhanced” death benefit as well, sold as a policy “rider” for an additional fee. Enhanced riders go by a variety of names: Enhanced Death Benefit Rider, Accumulator Rider, “Greater Of” Death Benefit, Guaranteed Death Benefit, Return of Premium Rider, and HAV Rider (Highest Contract Anniversary). Whatever the brand name, the fees add up fast. On an annuity offering say a 3% return you might lose half your return when you accept the coverage. Also, death benefits may be reduced or lost when you annuitize (accept the income stream you were promised in the first place), make a withdrawal, cancel, or surrender the contract and likely incur surrender charges and a tax liability as well.
There are tax considerations whenever the annuity owner dies, and you should consult your tax advisor on the tax treatment of any contract proceeds. One of the first complications after death can be in valuing an annuity for estate tax purposes. The issuing carrier will also require the beneficiary to make certain elections regarding the payout. Each election will have economic consequences, including tax issues. Like IRAs, inherited annuities are subject to required distributions and again you will need to consult your tax advisor before electing a payout or distribution schedule so you know what your tax bill will be. If the contract is annuitized the beneficiaries lose control of the asset and receive annuity payouts solely on a schedule determined by the issuer.
Contact Us
If you are over 60 and live in San Francisco or elsewhere in California and have been sold an inappropriate or unsuitable investment product or suffered loss on an annuity or life insurance surrender or replacement or at the death of the contract owner, contact Ingrid M. Evans and the other annuity and financial elder abuse attorneys at the Evans Law Firm for a free review of your policy at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our attorneys have experience with complex indexed universal and whole life policies and annuity contracts and cases against large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We also handle cases involving physical and financial elder abuse, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
Annuities and life insurance produce large sales commissions for brokers but are often inappropriate products for consumers, especially seniors. Leading providers and distributors of life insurance and fixed, variable and fixed indexed deferred annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. Rather, the list is provided solely as a reference for our readers.
AIG/American General Life Insurance Company
Allianz Life Insurance Company of North America
American Equity Investment Life Insurance Company
American General Life Insurance Company/AIG
American International Group, Inc. (AIG)
American National Life Insurance Company
Ameriprise Financial/RiverSource Life Insurance Company
Ameriprise Financial/Securities America, Inc.
Athene Annuity & Life Assurance Company
Athene Annuity and Life Company
Athene USA
Aviva Life Insurance Company
AXA Equitable Financial Services, LLC
AXA Equitable Life Insurance Company/AXA US
AXA Advisors, LLC
Bankers Life Insurance and Casualty Company
Berkshire Hathaway Group
Berkshire Hathaway Life Insurance Company of Nebraska
Brighthouse Financial, Inc./MetLife
Citigroup Global Markets, Inc.
Crump Life Insurance Services, Inc.
CUNA Mutual Group/CMFG Life Insurance Company
Delaware Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company/Global Atlantic Financial Group
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Global Atlantic Financial Group/Forethought Life Insurance Company
Guardian Life Insurance Company
Guggenheim Partners/Security Benefit Life Insurance Company
ING USA Annuity and Life Insurance Company
Jackson National Life Insurance Company
John Hancock Life Insurance Company
Lincoln Benefit Life Company
Lincoln Financial Group
Massachusetts Mutual Life Insurance Company
Merrill Lynch Life Agency Inc.
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
National Life Group
National Life Insurance Company/Equity Services, Inc.
National Western Life Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
North American Company for Life and Health Insurance
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Oxford Life Insurance Company
Pacific Life Insurance Company
Principal Financial Group
Prudential Life Insurance Company
Raymond James Insurance Group
Reliance Standard Life Insurance Company/Tokio Marine Group
RiverSource Life Insurance Company/Ameriprise Financial
Securities America, Inc./Ameriprise Financial
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
The Standard Life Insurance Company
Symetra Financial Corporation
Symetra Life Insurance Company
Transamerica Life Insurance Company
The United States Life Insurance Company in the City of New York
Unum Life Insurance Company of America
USAA Life Insurance Company
The Variable Annuity Life Insurance Company
Voya/Reliastar Life Insurance Company
Wells Fargo Advisors
Western & Southern Financial Group
The Western & Southern Life Insurance Company
World Financial Group Insurance Agency, Inc.
[1] While we do not provide tax or investment advice at Evans Law Firm, we do represent consumers who have suffered losses from inappropriate investments sold to them by agents and brokers, and other misconduct.
