No one likes to talk about their own demise. Unfortunately, it is going to happen. When it does, your assets are going to pass to your heirs one way or the other. They can go through probate and be broken up however the court decides or they can pass directly to the people of your choice. You can let your heirs worry about the taxes or you can help them out by creating cash for them to pay the taxes on your estate.
Annuities can help avoid probate and create some extra money to pay the estate taxes with when the time comes. Annuities have beneficiaries attached to them. Like your IRA, they pass directly to your heirs. When they do, like the IRA, they create a tax problem.
It is obvious that annuities are not the best estate planning tools. Life insurance does a much better job of passing money to heirs but it is not always appropriate especially if you were planning on using the income from the annuity. Taxes are a problem for whoever inherits the annuity proceeds.
You can help a little. By adding the optional death benefits that annuities offer you can increase the death benefit to provide extra cash for your heirs when the time comes. You would be glad you did...if you were around to see the benefits.
What you would see is your heirs enjoying their inheritance. It will make their lives easier for a time for most. For some, they will use the extra money to plan their own retirement or open a business that will pass on your legacy to your grandchildren and great grandchildren.
If leaving a legacy is important to you then be sure to read - What Is The Death Benefit Rider?
Image by Joelk75 at Flickr.com
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