[WSBAPT] Joint annuity and estate tax

[Joshua McKarcher]

Unless some special rule applies I've not encountered, I think you must break it down into steps:


  1.  H's estate includes 50% of annuity's FMV as of his 2/4/23 date of death, assuming it was community property.


  1.  If truly JTWROS with no minimum other than 5 days or whatever is in the annuity contract, 100% passed to wife after survivorship period. Now it is 100% in her taxable estate. I don't know of any reason the will would alter the annuity contract's survivorship period or anything else about its passage to her.



  1.  If H's will has estate tax planning that can "use" or "allocate" other funds to "use up" his exemption amount, great. But the annuity seems to be irrevocably in W's estate and not "useful" for allocation to his estate tax protection mechanism. (I imagine some here might wonder if she could give a promissory note or some such thing to the husband's estate for half the annuity's value or other clever ideas. But I just don't know how/why that would work. But that's a statement of ignorance, not confidence.)



  1.  W's estate includes 100% of annuity's FMV as of her 3/9/23 date of death. I can think of no way around that by step 4. Your solution, if anything, should have to do with steps 2 or 3.


But I very well may have just taken your watch and told you what time it is. If so, I apologize and I blame the headache bouncing around in my brain . . .

Good luck!


From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Timothy Lehr
Sent: Wednesday, December 6, 2023 2:52 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Joint annuity and estate tax

All,

My partner in my firm has a probate/estate tax issue he is looking for guidance on:

Husband and Wife have annuity in both their names.   It appears that it was JTWROS although getting the verifying information from the annuity company has not been easy.    They both had wills that leaves everything to each other (provided the spouse survives by 90 days) and then to the same list of heirs.
Husband passes on 2/4/23.  Wife passes on 3/9/23.  Wife did not place the annuity into her sole name prior to her passing, nor access any of the funds therein.    There was no contingent beneficiary for the annuity.     Probate was started for both H & W of which the annuity is a probate asset.
The issue for estate tax purposes, is whether the annuity is to be split 50/50 between each estate, or is the entire value of the annuity is 100% under the wife's estate - especially in light of the "survive by 90 days" language in Husband's Will.

Thanks in advance for any thoughts.

Tim


Timothy C. Lehr
Attorney & Partner

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