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My mother passed away in Oct. It took awhile to get the combination to her safe. We were surprised to find that she had documents in it showing that she had purchased an Annuity 10 years ago that was not scheduled to mature and start making payments to her for another 10+ years. She never mentioned this to any of her 5 kids. I am the eldest and named executor in her will.
None of us have ever dealt with any annuities before, so I'm wondering if I'm reading this correctly.
Policy Date: Feb. 5, 2004
Annuity Commencement Date: Feb. 28, 2027
Surrender Charges: none after year 7.
It includes an "Illustration" of the cash value and policy value each year for 20 years.
It does not name any heirs in the document that I have. I realize that the insurance company may have a separate "heirs" document, but consider it unlikely.
From what I read in the document attachments it sounds like we, the heirs named in her will, might be entitled to cash in the Annuity for its "cash value" since it has not reached the Annuity Commencement Date. All that it says about "Cash Value" is: "The Cash Value may be partially withdrawn or will be paid in the event of a full surrender of the policy. We must receive your written withdrawal or surrender request before the Annuity Commencement Date."
So I'm thinking that I as executor may be able to request that it be surrendered for the Cash Value, payable to the heirs. I intend to contact the insurance company and request this, but I thought I'd see what I could learn about it first.
You will have to call the insurance company and supply them with the appropriate paperwork to get more information. If there is a beneficiary named, then the $$$ passes by contract and not by the direction of the will...so you would not include it in the estate inventory...if it does not have a named beneficiary then your mother's will should identify where it goes and would be included in the corpus of the estate.
There will likely be a cash value 'death benefit' close to (or slightly greater than) the original purchase price, since you have passed the 7-year surrender fee period. You will also likely have the ability to convert this annuity to an annual payout figure. For example, I'm dealing with an annuity that will provide me with a lifetime payout -- that increases with each year I delay starting the payments.
In addition to the specific terms and death benefit of the annuity, the specified disposition of the estate AND the immediate vs delayed, benefit vs need of the recipient/s will be factors you will probably want to consider.
My mother passed away in Oct. It took awhile to get the combination to her safe. We were surprised to find that she had documents in it showing that she had purchased an Annuity 10 years ago that was not scheduled to mature and start making payments to her for another 10+ years. She never mentioned this to any of her 5 kids. I am the eldest and named executor in her will.
None of us have ever dealt with any annuities before, so I'm wondering if I'm reading this correctly.
Policy Date: Feb. 5, 2004
Annuity Commencement Date: Feb. 28, 2027
Surrender Charges: none after year 7.
It includes an "Illustration" of the cash value and policy value each year for 20 years.
It does not name any heirs in the document that I have. I realize that the insurance company may have a separate "heirs" document, but consider it unlikely.
From what I read in the document attachments it sounds like we, the heirs named in her will, might be entitled to cash in the Annuity for its "cash value" since it has not reached the Annuity Commencement Date. All that it says about "Cash Value" is: "The Cash Value may be partially withdrawn or will be paid in the event of a full surrender of the policy. We must receive your written withdrawal or surrender request before the Annuity Commencement Date."
So I'm thinking that I as executor may be able to request that it be surrendered for the Cash Value, payable to the heirs. I intend to contact the insurance company and request this, but I thought I'd see what I could learn about it first.
Any comments or thoughts would be appreciated.
Thanks
I'm going through the exact same thing right now with my mother-in-law's estate.
If the annuity is solely in her name and none of the children appear anywhere on it, you are probably going to have to open probate to get a personal representative appointed to deal with the annuity company. You said you are Executor of the Will? Do you have a formal document issued to you by the court making you Executor? The document should be called something like "Letters Testamentary". Perhaps, there will also be a formal "Order of Appointment" from the court? If you don't have these documents you need to file to probate the estate to get the court to issue them.
First, call the annuity company and explain the situation. Ask them what documentation they will need to speak directly to you. If you are lucky, they may do it with simply a death certificate. They will describe the terms of the agreement. If you have a problem with anything they are saying, I would have it reviewed by an attorney. As at least one other has said here, the language in the annuity contract is critical. It is possible the annuity company may even refuse to speak to you until you show them "Letters Testamentary" issued by the probate court.
I'm going through the exact same thing right now with my mother-in-law's estate.
If the annuity is solely in her name and none of the children appear anywhere on it, you are probably going to have to open probate to get a personal representative appointed to deal with the annuity company. You said you are Executor of the Will? Do you have a formal document issued to you by the court making you Executor? The document should be called something like "Letters Testamentary". Perhaps, there will also be a formal "Order of Appointment" from the court? If you don't have these documents you need to file to probate the estate to get the court to issue them.
First, call the annuity company and explain the situation. Ask them what documentation they will need to speak directly to you. If you are lucky, they may do it with simply a death certificate. They will describe the terms of the agreement. If you have a problem with anything they are saying, I would have it reviewed by an attorney. As at least one other has said here, the language in the annuity contract is critical. It is possible the annuity company may even refuse to speak to you until you show them "Letters Testamentary" issued by the probate court.
Thank you for sharing that information. I'm beginning to fear that the estate will have to go through probate. I'm much to familiar with that process as my wife passed away in April and I have had to go through that process, the lawyer cost $2,200. Texas law requires that you use a lawyer to probate and obtain Letters Testamentary.
No I have not yet asked the courts to approve me as Executor, although I am designated as such in the will. Up until we found this Annuity it appeared that my Mother's estate in Arizona would not have to go through probate. Arizona has a "beneficiary deed" there that allowed her house to bypass probate, going directly to the beneficiaries named on it. An alternative is also available for her car. My sister was already named as a co-owner of Mom's bank account. And the family all worked together cooperatively to distribute personal possessions in accordance with her will. So we thought we were done, until we discovered the Annuity in her safe. Looks like I will have to research the Arizona requirements more carefully to determine if I must have a lawyer for probate there.
Thanks again to everyone who offered comments. I will contact the insurance company and find out what they require. It would be nice if beneficiaries were already listed and it could bypass probate.
Thank you for sharing that information. I'm beginning to fear that the estate will have to go through probate. I'm much to familiar with that process as my wife passed away in April and I have had to go through that process, the lawyer cost $2,200. Texas law requires that you use a lawyer to probate and obtain Letters Testamentary.
No I have not yet asked the courts to approve me as Executor, although I am designated as such in the will. Up until we found this Annuity it appeared that my Mother's estate in Arizona would not have to go through probate. Arizona has a "beneficiary deed" there that allowed her house to bypass probate, going directly to the beneficiaries named on it. An alternative is also available for her car. My sister was already named as a co-owner of Mom's bank account. And the family all worked together cooperatively to distribute personal possessions in accordance with her will. So we thought we were done, until we discovered the Annuity in her safe. Looks like I will have to research the Arizona requirements more carefully to determine if I must have a lawyer for probate there.
Thanks again to everyone who offered comments. I will contact the insurance company and find out what they require. It would be nice if beneficiaries were already listed and it could bypass probate.
My condolences for the passing of your mother and wife.
Earlier this year, my mother also passed.. and there were two IRA's that did not have any beneficiaries listed, so those had to go through probate. Here in Arizona ( I live in Phoenix ), you do not need a lawyer and in fact it's fairly simple. I would strongly recommend however, at least calling an attorney here to make sure nothing with your mom's estate is "out of the ordinary". I used an attorney here and spent a little more than hour with her, as she discussed and made notes on the various forms and steps to make sure the probate process went smoothly. The fee for an hour of her time and the cost required for the probate process, was far less than the $1,800 the attorney who set up the family trust wanted.
Below are a couple links you can use. The first is to the Maricopa County Superior Court website to download the forms:
Definitely contact the insurance company before you do anything else. Most of these annuities include a death benefit which is treated as life insurance and may keep the annuity out of the estate altogether.
My condolences for the passing of your mother and wife.
Earlier this year, my mother also passed.. and there were two IRA's that did not have any beneficiaries listed, so those had to go through probate. Here in Arizona ( I live in Phoenix ), you do not need a lawyer and in fact it's fairly simple. I would strongly recommend however, at least calling an attorney here to make sure nothing with your mom's estate is "out of the ordinary". I used an attorney here and spent a little more than hour with her, as she discussed and made notes on the various forms and steps to make sure the probate process went smoothly. The fee for an hour of her time and the cost required for the probate process, was far less than the $1,800 the attorney who set up the family trust wanted.
Below are a couple links you can use. The first is to the Maricopa County Superior Court website to download the forms:
Hope this helps. But again, I'd really advise reaching out to an attorney here in Arizona, that specializes in Estate law.
Thank you for this information Brian. It is all very helpful. Isn't it ironic that the Fiduciary training module for "Informal Probate" still takes 55 slides to explain the process and steps required.
Still I can see already that Arizona has much simpler and less expensive options for settling estates, when compared to Texas. And I recall my Texas attorney bragging that Texas has a simpler process than most other states.
I do intend to contact the attorney in AZ after I contact the insurance company.
Definitely contact the insurance company before you do anything else. Most of these annuities include a death benefit which is treated as life insurance and may keep the annuity out of the estate altogether.
Thank you for your comments Duster, I think that is good advice and intend to do so.
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