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Had not seen this happen in awhile, but wonder what you writers of NQ annuity are doing when writing new NQ Annuities.
I have always suggested avoiding Joint ownership because of the major pitfalls at time of death of either owner--current example
$550,000 NQ annuity with $250,000 gain. Wife is annuitant, husband & wife are joint owners, Husband listed as beneficiary & their 3 children as contingent. I assume the rep listed the husband as primary beneficiary because the wife was annuitant & thought the claim would only pay if wife died.
However, the law not only says a claim must pay out if the annuitant or any owner dies, it says must empty it within 5 years of death.
Biggest problem with this case is the husband died as owner & primary beneficiary. wife is still living but cant keep the contract open & even worse, she isnt the beneficiary as the husband was primary & kids contingent. So, kids are receiving the death claim & will be taxed on the gains in a lump some or at longest the 5 year deferral depending on which each of them elects
For any of you writing NQ annuity & putting joint owners, are you making sure you put both of those owners as the primary beneficiaries to protect this scenario?
Regulations 72(s)(1)(B) on death of owner clearly states death claim occurs at death of "any" owner, not just both owners that would be the case with other assets held in joint rights with survivorship.
I still believe in avoiding joint ownership for this reason unless others can help me understand better options.
PS-- not talking about payout annuities that can/should be sometimes joint based, talking about those in deferred status
I have always suggested avoiding Joint ownership because of the major pitfalls at time of death of either owner--current example
$550,000 NQ annuity with $250,000 gain. Wife is annuitant, husband & wife are joint owners, Husband listed as beneficiary & their 3 children as contingent. I assume the rep listed the husband as primary beneficiary because the wife was annuitant & thought the claim would only pay if wife died.
However, the law not only says a claim must pay out if the annuitant or any owner dies, it says must empty it within 5 years of death.
Biggest problem with this case is the husband died as owner & primary beneficiary. wife is still living but cant keep the contract open & even worse, she isnt the beneficiary as the husband was primary & kids contingent. So, kids are receiving the death claim & will be taxed on the gains in a lump some or at longest the 5 year deferral depending on which each of them elects
For any of you writing NQ annuity & putting joint owners, are you making sure you put both of those owners as the primary beneficiaries to protect this scenario?
Regulations 72(s)(1)(B) on death of owner clearly states death claim occurs at death of "any" owner, not just both owners that would be the case with other assets held in joint rights with survivorship.
I still believe in avoiding joint ownership for this reason unless others can help me understand better options.
PS-- not talking about payout annuities that can/should be sometimes joint based, talking about those in deferred status
