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Old 09-18-2017, 08:48 PM
 
387 posts, read 676,231 times
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Hi Group,

We have a decision to make on an annuity beneficiary. Maybe some of you have already had to make a decision like this.

A Florida husband and wife each have children from a previous marriage. They have drawn up individual trusts to be sure that certain monies and assets stay in each of their respective families, ie also known as a blood line trust.

An interesting scenario has presented itself. With the wife retiring, her company forces the retiree to take the pension as a lump sum dollar amount. These dollars were deposited into an annuity.

The question is this. Who does the wife name as the beneficiary? The husband or her trust?

As I understand it-

One one hand, if the wife names the husband as beneficiary, if she passes first, the husband has the option to continue the annuity payments until his death. But any monies left over would then go to whoever the husband were to name as the new beneficiary. And if the husband is not capable of naming the new beneficiary, the husbands children who are power of attorney get to make the decision on the wife's money.

On the other hand, if the wife names her trust as the beneficiary, if she passes first, then the annuity would cease to exist and whatever cash remains, possibly a very small amount or nothing at all, would be paid out as a lump sum, ie the husband loses the lifetime payout. Whatever that amount is, the monies are controlled by the wife's trustee and the money, after continuing to pay for the husband, any remaining will stay in the wife's blood line as planned. But as I said, the drawback is the annuity ceases and the husband does not get the benefit of continued payments for his life.

The goal is to allow the husband to continue to benefit from the wife's annuity or cash from the annuity for as long as he is alive, but return whatever might be left over to the wife's blood line after the husband passes.

Does this sound like a common problem to those who might have had to make this similar choice? Any ways around this?

Thanks for any input from any estate lawyers or insurance people on the matter.

Last edited by tom11011; 09-18-2017 at 09:22 PM..
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Old 09-18-2017, 09:10 PM
 
Location: South Florida
195 posts, read 106,294 times
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I am not sure about the annuity. There are many types. I would get one that pays out to the wife but on her death there is a lump-sum payout, which I would have going to her trust.

I have a trust because my husband has dementia and in the (unlikely) event that I died first I want him taken care of. My son died several years ago so after my husband goes the money would be split among my siblings. My husband has the most God-awful daughter and I wanted to be sure that none of my money ever winds up in her pocket. If I actually left money directly to him rather than in a trust for his benefit I really believe his life would be in jeopardy... that's how bad she is.
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Old 09-18-2017, 09:51 PM
 
Location: SoCal
6,066 posts, read 9,529,219 times
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Almost certainly there can be multiple beneficiaries. So it's probably not a binary question. Since there are already individual trusts, presumably the couple have considered various levels of division of assets. Apply similar thinking to the beneficiaries to the pension.
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Old 09-19-2017, 02:26 PM
 
Location: Florida
4,365 posts, read 3,700,708 times
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I would name the husband.
Why little or no value to leave to the trust.
Husband may need the funds.
He could name wife's trust as beneficiary if there was any value left.
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Old 09-19-2017, 05:15 PM
 
387 posts, read 676,231 times
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Quote:
Originally Posted by rjm1cc View Post
I would name the husband.
Why little or no value to leave to the trust.
Husband may need the funds.
He could name wife's trust as beneficiary if there was any value left.
If he is unable to name the wife's trust as beneficiary because he has dementia or is ruled incompetent as a result of advanced age, you can bet his kids, who will have power of attorney over him, will not do so. His kids will become the new beneficiary of money that was never intended to go to them.
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Old 09-19-2017, 07:12 PM
 
Location: Florida
4,365 posts, read 3,700,708 times
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Quote:
Originally Posted by tom11011 View Post
If he is unable to name the wife's trust as beneficiary because he has dementia or is ruled incompetent as a result of advanced age, you can bet his kids, who will have power of attorney over him, will not do so. His kids will become the new beneficiary of money that was never intended to go to them.
Yes, but he could put it in his will today and once he has dementia he can not change the will.
Also I think the OP infers that there will be little value to the annuity at both deaths.
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Old 09-19-2017, 07:21 PM
 
2,980 posts, read 2,705,274 times
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If the wife were to die and the income from the annuity stop, would the husband have enough money to live on? If so, make her trust the beneficiary. If not, make the husband the beneficiary because he needs the income. And if a few thousand from the wife's annuity ends up going to the husband's kids, so be it. If the wife hated his kids so much, she shouldn't have married him. The most important thing is for the husband to have enough income if she predeceases him, and for her to have enough income if he predeceases her.
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