Mistakes in Titling Annuities Could Have Undesirable Results

There’s more to retirement than managing assets; you must also ensure that those assets are titled correctly. Not doing so, particularly in regard to annuities, can have major implications for you and your loved ones. Let’s say you decide to invest move some of your assets from a mutual fund to an annuity because you want your beneficiaries—your children—to receive the annuity death benefit. The chart below illustrates. Sample titling of an Annuity vs. Mutual fund:   Mutual fund Title of account Joint owners: John and Jane Doe, joint tenants with right of survivorship (JTWROS) Event John Doe’s death Asset distribution Jane Doe, as joint tenant, controls the assets in the mutual fund   Annuity Title of account Joint owners: John and Jane Doe Annuitant: John Doe Beneficiaries: Sam and Sarah Doe Event John Doe’s death Asset distribution As beneficiaries, Sam and Sarah Doe receive the annuity death benefit This seems simple enough but not so fast. Mis-titling the annuity could potentially result in an unexpected payout with undesirable tax consequences. Here’s how. Again, John and Jane Doe are the owners of the annuity. If John Doe dies, the annuity would in all likelihood pay out to the beneficiaries, the [...]

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