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Question for the Money Doctors

Question submitted on Oct 16, 2012.

Question

My parents have several annuities. Most are part of their Revocable Living Trust. WHO IS BENEFICIARY OF THE ANNUITIES IN THE TRUST? The beneficiaries listed in the Trust or the beneficiaries listed on the annuities?

Answer

Unfortunately, there is not a simple answer to this question.

There are two forms of annuity contracts: owner-driven and annuitant driven. In the owner-driven annuity, the death of the contract owner triggers benefits. However, these benefits are not paid to the beneficiaries immediately. The annuitant is essentially the beneficiary. Once the annuitant dies, the money then passes along to the beneficiaries. When the owner and the annuitant are the same in an owner-driven contract, once the owner/annuitant dies, the money passes to the beneficiaries. 

In an annuitant-driven contract, the death of the annuitant triggers the benefits and the benefits go to the beneficiaries.  

I recommend that you discuss these issues with the insurance companies that issued the annuity contracts. They will be able to look at each contract and advise you as to when and how the benefits will be paid.


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