Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev | Next
Author: peppermintpatty Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Re: annuity to life insurance Date: 11/29/2000 9:26 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
skipkit -

While I'm not sure of the details you were presented, the concept is generally sound. Annuity money will pass to your named beneficiaries as ordinary income (the gains, less the basis) just as you would be liable for taxes upon withdrawing. Life insurance proceeds, however, pass to beneficiaries without tax liablity (to the beneficiary - your estate may still have to settle with the IRS based upon its size...).

Essentially, withdrawing funds from an annuity (and paying taxes as they are due), and using the money to pay premiums for a life insurance policy is often done by individuals with similar goals to yours. Because you said you had "substantial" amounts in annuities, I would suggest you calculate your estimated estate tax liablity to determine (1) how much insurance would be needed to help pay tax + leave a legacy for heirs, and (2) what might be the best ownership for the insurance policy (i.e. owned by an heir or a Irrevokable Life Insurance Trust). You might want help with this process - look for a qualified estate planner, financial planner, or tax attorney or CPA with experience in this area.

Good luck & best wishes, PP
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Kate Spade's Wild Ride
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement