No. of Recommendations: 2
Author: rpatwa1 Date: 12/23/01 8:38 AM Number: 32885
It's been a tough year for me. The house I grew up in caught fire and exploded (hit the gas line), killing my father and brother. I'm trying to piece together the financial life of my dad so my mom (who luckily was out of town) can live easily for the rest of her life.

What a horrible thing to happen!! I feel so sorry for your loss! I'm glad your Mom was out of town.

My dad had several variable annuities (many of which I have no records of, but the insurance agent mentioned) which I'd like to get the money to my mother...How can I get this money out of the annuity? The mortality clause should give us the whole value, right, but it's taxed at income tax levels. Is it worth keeping it as an annuity to avoid this tax?

I'm no expert in annuities, but I do have a personal experience to share. When my father died a couple of years ago he had an annuity, and it passed directly to the beneficieries (the three children) with several options. We could take our share of the money as a lump sum, have it spread over five years of payments, delay the lump-sum payout for five years, or annuitize it and receive payments over the remainder of our lives.

Assuming your father's annuities were similar to ours, they were purchased with after-tax money, so one key thing to find out is what the cost bases are, because you will only have to pay income taxes on the gain. For instance, if your father paid $50,000 for an annuity and it is worth $75,000 now, income taxes will only be owed on the gain of $25,000, and not the whole amount.

However, as far as I know, every annuity is governed by its contract and there are many different arrangements, so you really have to find out the companies who sold the annuities to your father and ask them for all the details.

Again, I'm sorry for your loss.

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