Unintended consequences—it’s a phrase that sends chills down the spines of every professional who can be held liable for innocent mistakes. With millions of dollars at stake, decisions by estate planners must be well-informed and exhaustively considered. When variable annuities are involved in a client’s estate plan, what you don’t know can hurt you and your clients.
Many high-net-worth individuals have been advised by estate planning attorneys to set up a variable annuity contract in a way that could potentially harm their retirement plans. Annuities are an investment product tied to an insurance company that offers guaranteed monthly payments over the lifetime of an individual and, in many cases, a death benefit. If you haven’t brushed up on your knowledge of variable annuities during the past decade, it’s time for a serious study session, because there have been many living and death benefit provisions offered that are unique to variable annuities in recent years. Each contract is different and has distinct provisions and features based on the carrier and year of issuance, and a contract with little or no actual account value can still offer strong guarantees to the investor. Annuities are unlike other types of investments, and their many nuances must be gone over with a fine-tooth comb.
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