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I'm retired, 73 yrs old, and want to invest about 100K. I attended a Hantz presentation set up through my credit union. I want to invest this and leave it to my disabled daughter through an irrevocable trust. She doesn't need income, but I want to insure she has the trust to draw on in case of whatever might come up after I'm gone.

The Hantz rep suggested two annuity funds through Prudential.

The first one is called QMP, or Pru PI B-AST Quantitative Modeling Portfolio. It isn't for income, it's an investment. This one has a guarantee that you get at least what you put in. If there are gains, you get that. There's a death benefit rider so when I die, the money goes to my daughters trust, cost of the rider is $400+ per year. There is a surrender charge to withdraw for a few years, and I don't see that happening, so that's ok. I can't seem to find anything online for this. I do have a PDF from Morningstar on it, but can't make much sense of it.

I've had a sort of negative view of annuities in the past. But this one seems to meet my needs with the guarantee.

The other one is The Prudential PruSecure Fixed Indexed Annuity.
http://www.prudential.com/media/managed/documents/pruannuiti...
http://www.prudential.com/media/managed/documents/fp_portal/...
This has a cap and a floor.

He wants me to put it all in the first annuity, the QMP. So I'm hesitant. Aren't we supposed to not put all our eggs in one basket? What will his commission on this be? What else am I missing here?
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No. of Recommendations: 14
You don't need the money now or any time soon. And your daughter doesn't need it now or any time soon.

So why do you care if the invested money goes up and down a bit (or a lot) with the market? If it is invested in the broad market and goes down, it will also come back up when the market comes back.

Annuities like this are sold on fear - your fear of the value going down for some unknown period of time. But the market has always recovered. The market drop in 2008/2009 was one of the worst in the last century. But here we are 10 years later and we are above the level we were before that drop.

Put the money in a low cost, broad market index fund, reinvest the dividends (except for what the trust will need to pay taxes on the dividends), and let the market do it's thing. Your daughter will come out way ahead of the annuity.

--Peter
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...leave it to my disabled daughter through an irrevocable trust.

If your daughter receives any government benefits, such as SSDI, and you don't already have a Special Needs Trust, you should look into using that as a vehicle to not only pass assets to her, but also protect her benefits after you're gone.

There's an organization called the Special Needs Alliance https://www.specialneedsalliance.org/ which can help you find an attorney qualified to setup a Special Needs Trust. Not all attorneys have the requisite training.

Bob
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No matter how attractive the sales pitch, variable annuities are among the most profitable financial products for the people who sell them.

Investing in a low cost, no load index fund is a far better choice.

Or consider that you can probably find an adviser to manage your investment for less than the fees for the annuity. (Consider that the surrender charge is the way the company recovers the fee they paid to the salesman when you signed.)
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I'm retired, 73 yrs old, and want to invest about 100K...
He wants me to put it all in the first annuity, the QMP. So I'm hesitant. Aren't we supposed to not put all our eggs in one basket? What will his commission on this be? What else am I missing here?


1. If all you have is 100K in investable money, don't put it into an annuity. If you have many other investments, you aren't putting all your eggs in one basket.

2. Why can't you ask him what his commission will be? If your'e paying it, directly or indirectly, I don't see how it's out of line. There seems to be a huge bias against ever asking our financial advisors "How are you compensated for this?"

3. Another question you might want to know the answer to is "Are you a fiduciary?" A fiduciary has to do what's best for you, whereas an advisor merely has to advise something "appropriate." Something with high fees might be as "appropriate" as a similar low-cost vehicle, so this is something one ought to know.

4. Maybe a better question than "should I invest in XYZ" would be "What's the best way to accomplish this goal?" There isn't enough information in your post to come at it that way, though.
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irrevocable trust.

Creating an irrevocable trust limits the changes you can make to the trust after it is created. So, unless there are overriding reasons, such as you're about to lose a lawsuit, consider creating a revocable trust which converts to irrevocable at your death.
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JonathanRoth: "Creating an irrevocable trust limits the changes you can make to the trust after it is created. So, unless there are overriding reasons, such as you're about to lose a lawsuit, consider creating a revocable trust which converts to irrevocable at your death."

Not my area of expertise, but by the time you are about to lose a lawsuit, it may be too late to use a trust to shelter assets. If someone is considering this, they should consult a knowledgeable trusts attorney.

Regards, JAFO

Disclaimer

Yes, I am a lawyer, BUT THIS IS NOT LEGAL ADVICE; it is only general information. NO CLIENT RELATIONSHIP IS INTENDED TO BE CREATED, NOR IS ANY SUCH RELATIONSHIP SO CREATED. FOR SPECIFIC LEGAL ADVICE YOU SHOULD TALK TO A LAWYER IN YOUR AREA.
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Not my area of expertise, but by the time you are about to lose a lawsuit, it may be too late to use a trust to shelter assets.

Very true, however, I didn't want to go into much detail as there may be other times when a irrevocable trust makes sense.
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