My dad had an annuity.  He named his six children as beneficiaries.  In our case, this was the best way to pass an annuity.  Why? By naming us separately, we could each take our distributions when it made sense for our individual needs. Here is how an inherited annuity works: whatever is contributed to the annuity is a return of principle and tax free.  Any gain is taxed to the beneficiaries at ordinary income tax rates.  So we need to ask, “What effects can income from an annuity have on the beneficiary, their personal situation and their tax brackets? Does…

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When naming beneficiaries, my dad did a lot of things right … and one wrong thing. I blame myself for the mistake. My dad named his “estate” as the beneficiary of his life insurance policies. The insurance company will not talk to us because they don’t’ know ‘who’ the estate of Frank Thompson is. We are now in the process of hiring a Texas attorney (his state of residence) and going through the probate process. Probate is expensive and it is a lengthy process. This could have been avoided if he had named his trust or his six children as…

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