Setting up an annuity for those that depend on you……

All the recent articles on Mothers’ day led me to thinking about the financial instruments and money security, especially for our previous generations of women. Most women were/ are housewives with little knowledge of money matters and financial security which was usually handled by men and for many it still is.

Life is fragile and it is of the utmost importance to secure the financial security of people who are dependent on us. This leads to today’s topic. If one is financially able, they may use a private annuity to secure the future comforts of their dependents. i.e. spouse, kids, parents, siblings etc.

A private annuity is an agreement that transfers assets from one party to another person or entity in exchange for periodic payments for the duration of his or her life eliminating or greatly reducing estate or gift taxes on the exchange because it changes the transfer from a gift to a sale. The parties involved may be either individuals or a trust that has been set up to transfer assets and money. A parent or grandparent may use the private annuity method to transfer stock, a business interest, or other assets to a child or grandchild in exchange for periodic payments for the rest of the parent’s or grandparent’s life. This transfer is a legally enforceable contract, although unsecured; since the payments stop at the death of the annuitant, there is no inclusion in the estate. Only the part of the payment to the annuitant that is considered interest earned is taxable to the annuitant during his or her lifetime.

Happy Mother’s Day


2 thoughts on “Setting up an annuity for those that depend on you……

Add yours

  1. Hi, I just read your article on annuity and I thought it was really helpful. I reality hope my blog becomes as good as yours. The Brontë quote was great too!


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