The estate tax treatment given annuities depends on whether death occurred before or after the annuity starting date. If death occurred before the annuity starting date, i.e. during the accumulation period, the entire value of the annuity contract is includible in the owner-decedent’s federal gross estate.
If death occurred after the annuity starting date, the commuted value of any remaining payments under the contract is included in the owner-decedent’s federal gross estate. Therefore, if the decedent had selected a straight life annuity no value would be included in his or her federal gross estate because no benefits are payable to a beneficiary under a straight life annuity. However, if the decedent elected a period certain and died before the end of the selected period, the commuted value of those remaining payments due the beneficiary is included in the decedent’s estate.
Annuities Settlement
Wednesday, June 18, 2008
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