My 100 year old FIL has a Met Life NQ annuity that is still sitting there. He's a widower and has 3 children all in their mid or early 70's. He's doesn't need the lump sum or an income stream from it.

Should he just leave it there till he dies and let his estate pay the taxes or go ahead and cash it in and pay the taxes then distribute the balance to his children. He's think about annuitizing it and at his age I don't think it is possible or wise.

He wants to minimize taxes. I believe his 3 children are listed as beneficiaries.

Don't know how long he has had it or what is basis is.

What state is it located?

He lives in Louisiana

What's the basis in it? Need to know that to make a decision.

Could potentially move it to a carrier who has a private letter ruling for prorata taxation on the distributions...for him, and for the beneficiaries. The age is going to be an issue. Has no one had eyes on it? Surprised it hasn't forced annuitization.

mosdefn14 said:

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What's the basis in it? Need to know that to make a decision.

Could potentially move it to a carrier who has a private letter ruling for prorata taxation on the distributions...for him, and for the beneficiaries. The age is going to be an issue. Has no one had eyes on it? Surprised it hasn't forced annuitization.

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He just like to sit on his assets and just wants to avoid taxes and he counts on his son who is a retired oil accountant and does his own investing to advise him, but he just sits on his hands. FIL is a very stubborn German and won't hire a tax advisor when he thinks TurboTax will solve his issues. lol. . I'm like you and surprised that Met didn't force the issue. Hopefully I can get his basis this week. He will be 101 in August.

He means the initial deposit for the annuity.

His cost basis is $45,000. The total is $507,000.

If he has any charity in his will take it from the annuity, I think that will negate the taxes. I'm not positive on that. If he doesn't there doesn't appear to be any way to avoid the taxes on that $462k worth of income. The Texas A&M Foundation has a bunch of annuity advisors that should be able to discuss a transfer of that annuity.

OldArmyCT said:

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If he has any charity in his will take it from the annuity, I think that will negate the taxes. I'm not positive on that. If he doesn't there doesn't appear to be any way to avoid the taxes on that $462k worth of income. The Texas A&M Foundation has a bunch of annuity advisors that should be able to discuss a transfer of that annuity.

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Thanks, but he's not the charity kind.

Short of giving it to charity no way to avoid the taxes. It'll be at ordinary income rates. So the plan should be to evaluate the marginal tax rate of him versus the beneficiaries.

I'd suspect it's probably less expensive to split the tax bill amongst the beneficiaries rather than have one individual pay it.

It'll be expensive but just the cost of doing business.

Not much you could do to reduce it.

For the beneficiaries when they inherit, if they have a high enough net worth could evaluate some unique tax benefits offered by the AQR hedge fund for example. Very complex product not appropriate for most but if you hate paying taxes it does offer some benefits not found elsewhere.

Holistic Planning said:

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Short of giving it to charity no way to avoid the taxes. It'll be at ordinary income rates. So the plan should be to evaluate the marginal tax rate of him versus the beneficiaries.

I'd suspect it's probably less expensive to split the tax bill amongst the beneficiaries rather than have one individual pay it.

It'll be expensive but just the cost of doing business.

Not much you could do to reduce it.

For the beneficiaries when they inherit, if they have a high enough net worth could evaluate some unique tax benefits offered by the AQR hedge fund for example. Very complex product not appropriate for most but if you hate paying taxes it does offer some benefits not found elsewhere.

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How could the beneficiaries be responsible for the taxes if they don't own it? One sibling wants to annuities it , but I don't think you can bring he's a 100 years old. Don't payments stop and he too old for any guaranteed benefit. It's a Met Life contract

When you inherit it you'll have to pay taxes on the amount you withdraw above the basis.