Can I Gift my Parents an Annuity?

Discussion in 'Annuities Forum' started by Buff Minorcan, Sep 4, 2015.

  1. Buff Minorcan
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    Sorry but I don't know much about annuities. Mom is 58 and dad is 61 so they have some working years left. Annuities sound like a nice compliment to their retirement plans so I was just wondering if I could gift them one.

    I was thinking 30 to 50 thousand dollars. Umm, what would that get them in guaranteed lifetime income? Is it even enough to purchase an annuity or does it need to be a higher amount?

    Is it something I can get them soon or do you have to wait until closer to 65?

    Thanks!
     
  2. Tahoe Ray
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    You can definitely do this but it leads to a lot of questions.

    Pm scagent83 or any of the other regular posters on the annuity forum for some direction.

    This is an admirable cause...congrats to you for thinking to take care of your parents this early on.
     
  3. Buff Minorcan
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    Well my grandparents lost a LOT in the stock market back in 2008 or so and put a dent in their retirement plans. I was just thinking it would be cool to gift my parents something guaranteed.
     
  4. Tahoe Ray
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    No doubt. Even though you're an agent, you should talk with another agent who specializes in this as though you're a consumer (which you basically are).

    These are the best type of cases to work with an experienced agent on...you'll learn something and maybe still make some dough.

    Lots of help to be had here...I'm sure that someone will come along soon.
     
  5. pcbinsurance
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    Shame on whoever was behind your grandparents having that much money in the stock market in their 70s.
     
  6. Buff Minorcan
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    Local investor been in business for 20 years, had their money tied up in a huge real estate investment that went under.

    He blew his brains out when it all crashed. Left behind a wife and a few kids.
     
  7. scagnt83
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    $30k would be enough to purchase most annuities on the market.

    Assuming they start income at age 65, and assuming they take a joint payout, and assuming the value is around $40k at that point, then they would be looking at around $1,800 per year in income for life.

    The longer they wait and the higher it grows to be, the higher the income will be since it is based on amount/age.

    I would actually suggest not doing an income rider right now due to the low interest rate environment. Look at a 6-10 year product, and then at the end of that time frame there will likely be much higher interest rates, which will create a much higher income for them.
    In other words, make your goal getting them accumulation that is safe from market fluctuations and locks in gains every year or two years.
    Then when they are ready to take income from it, there will likely be better products for them to move the funds to at that point.

    To explain further, we are at a historic low for interest rates right now. Locking into a product to produce income, means locking in historically low interest rates for life. Thats not the best idea in my opinion. Lock in rates once they go back up and it will be much more beneficial to them.

    They are a perfect age to get them an annuity. No need to wait because of age.

    One thing to consider though are gift tax implications. $14k will be exempted, but anything over that is subject to gift taxes (that you would pay, not them). if you are married then you could do $28k assuming you file jointly.

    You could always choose an annuity that allows multiple premium payments, and split the premium up over multiple years to stay within the gift tax exclusion. Or you could just purchase multiple single premium annuities over 2 or 3 years.

    As far as products go, I am a big fan of American Equities Dividend Aristocrats Index. And those are flexible premium products.
    AG also has a nice options that uses Merrill Lynch's Strategic Balance Index. But it is a single premium product.
    Both of those have a 0% floor, so if the index is negative then the policy just gets 0%. Both of those products just take a small fee from the overall gains of the index.
    Those are my two favorites right now.

    PM me if you would like.
     
  8. Buff Minorcan
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    I'm single so the most I could gift my parents tax free is 28k :(

    On the plus side, I'm single :)
     
  9. Tahoe Ray
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    As long as you don't give them over 5.43 million (your lifetime exclusion), you're all good.

    You just have to file an extra form with your taxes if you go over the annual exclusion.
     
  10. scagnt83
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    The most you can gift tax free is $14k per year. It is $28k per year if you are married ($14k each).
     

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