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have an annuity question?

Keeping assets out of probate with an annuity

While many people focus on financial risks like stock market volatility and inflation, there is another that could be even more dangerous – and that is your assets going through probate upon your passing. But keeping assets out of probate with an annuity can help.

What is Probate?

Technically, probate involves having your will (if you have one) submitted to the court, which ultimately has legal authority over the settlement of your estate. There are several misconceptions that are associated with the probate process.

One is that an individual must be wealthy in order for their assets to go through probate. This, however, is not the case. Likewise, while having a valid will in place can be helpful in some ways, it alone will not ensure that your estate won’t be subject to probate.

The probate process can be expensive and time-consuming. On average, with court costs and other fees, probate could reduce the overall size of your estate by 10% to 15%. It can also take time to complete – in some cases, a year or more.

With that in mind, there are certain types of assets – such as life insurance and annuities – that allow direct transfer of funds to a named beneficiary, which in turn can completely bypass the probate process.

How Annuities Can Better Ensure that Your Money Goes to Loved Ones

Annuities are a type of insurance product. And, as such, many annuities include a death benefit that will be paid out to one or more beneficiaries who are named in the contract if the annuitant (i.e., the income recipient) passes away before the funds in the account have been paid out.

This is the case, regardless of the type of annuity you have (such as fixed, indexed, or variable). Annuity beneficiaries can be individuals or entities (such as a favorite charity or other similar organization).

In many cases, once the insurance company receives a certified death certificate and other required paperwork, it will forward the funds from the annuity death benefit to the beneficiary(ies), without these funds having to go through probate.

(It is important to note, though, that unlike the death benefit that is paid out via a life insurance policy, annuity death benefit funds are typically not income tax-free).

What Type of Annuity is Right for You?

While annuities can offer a number of benefits, these financial vehicles are not the right fit for everyone. So, it is important that you understand whether or not an annuity makes sense for you – and if so, which type would best help you with reaching your financial objectives.

Because annuities can have many “moving parts,” it is recommended that you first discuss your long and short-term needs and goals with an annuity specialist. At Annuity Gator, we educate people on how annuities work so that they know what to anticipate from them.

If you would like to set up a time to chat with an annuity expert or if you still have additional questions regarding annuities and probate, please feel free to contact Annuity Gator directly by calling (888) 440-2468 or sending us an email by going to our secure online contact form. We look forward to helping you keep more of your assets out of probate and in the hands of those you love and care about.

Keeping assets out of probate with an annuity

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