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How to Control Beneficiary Designation


Hi...I have two good sons who are in their 30's from a first marriage. My second wife and I have been married many years, she's a wonderful woman. I am in the process of purchasing a variable annuity which will reside in an IRA account. If I die first, I would like my current wife to continue to receive distributions from the annuity. Upon her death, I would like any residual value in the annuity to flow to my two sons. While I trust my current wife implicitly, one can imagine scenarios where she is incapacitated and others could act on her behalf, making decisions that are not aligned with my wishes. How can I insure that my wishes will be carried out?
I am preparing to meet with my attorney to discuss this question. In a preliminary discussion, he has suggested that he draw up an "Agreement" that would be enforceable by my sons after my death that would obligate my current wife to name my sons as beneficiaries. In preparation for this meeting I would like your opinions on this or alternate strategies that would accomplish my goal...TIA, Ron
Reply to
ron

In Louisiana, a community property state under Napoleonic law, we use a usufruct "trust" where the asset is left to the children but the wife has all the rights to use it until her death.
I don't know if other states allow this.
Frank
Reply to
FranksPlace2

You would also want to include a provision for what would happen if either or both sons should happen to die before she does. And what if the brothers have a major disagreement about the annuity later on?
I would be inclined to get *two* annuities, both naming the wife as the primary beneficiary. Have each one name a different brother as the secondary beneficiary.
Reply to
bo peep

In recent years there has been a lot of criticism of variable annuities on this newsgroup and elsewhere. It has been pointed out repeatedy that the fees and expenses associated with these annuities are excessive and that they are not always the best choice for consumers. I am just wondering if there is not some better way to accomplish your goal via some other method with a different financial product.
Reply to
Don

Heritage trusts (generation skipping trusts), which handle such situations, are already in place for each of my sons. The "Agreement" would specify that the remaining value of the annuity flow 50:50 into these two trusts
Reply to
oitbso

On Sun, 6 Dec 2009 02:02:20 -0600, bo peep wrote:
For purposes of this discussion, I assume that the owner/annuitant is making withdrawals from the annuity's principal, as opposed to annuitizing the annuity's principal (receiving a lifetime income.)
Reply to
HW \"Skip\" Weldon

Once I start making withdrawals, my wife and I will receive distributions for the rest of our lives. A minimum lifetime(s) distribution is guaranteed. Depending upon market performance a remaining account balance may exist after the second death.
Reply to
oitbso

I have already purchased the product. I have reviewed it extensively with my financial advisors and we feel this specific product is the correct vehicle for this investment.
Reply to
oitbso

Talk to the annuity company - many have restricted beneficiary options that can be included in the contract. This would be the easiest way to handle this. If this isn't an option for you then you may need to restructure who the beneficiaries are, naming a QTIP or bypass trust as the recipient of the income stream with the residual monies going to remaindermen.
Gene E. Utterback, EA, RFC, ABA
Reply to
Gene E. Utterback, EA, RFC, AB

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