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Mistakes to Avoid When Naming Beneficiaries to Annuity Contracts

Jerry Rogers

One great advantage of owning an annuity is the ability to, upon your death, have your money flow to your beneficiaries without having to go through probate. Beneficiary designations take precedent over wills.  If you do not name a beneficiary your money flows to your estate. This may tie it up for an extended period of time and will subject it to court fees.  On the other hand, an insurance company will distribute the balance of an annuity within a matter of a few weeks at no cost.

It is a good idea to make it a habit to verify who your insurance company has listed as beneficiaries on your accounts as relationships change with marriages, divorces, deaths and births of children and parents.  Ask your agent to provide written proof from the insurance company. This will allow you to have peace of mind about your intentions being carried out after you pass away.

One common issue that occurs comes from trying to keep it simple. Many annuity owners will name one of their children as the sole beneficiary with the intent for that child to distribute the funds among all the children. This puts a burden on the named child to then communicate that the parent wanted a particular split among the children. If all the children and the various percentages of participation are listed on the beneficiary form, the potential for family stress is eliminated. The insurance company will then follow the parent’s wishes.  This also allows the sole child to avoid tax issues – he/she would be liable for 100% of the tax instead of spreading that liability among all the beneficiaries.

These are just a few of the mistakes we come across on a daily basis. To avoid a potential for real trouble, the best place to start is with a review of what you currently have in place. From there you should investigate your options and then take action to ensure that your funds will end up in the hands that you wish them to.

To learn more from this author, simply click here (Jerry Rogers).

About the Author:

Jerry Rogers is President of Rogers Tax Advisory Group located in Charleston, SC. In his role of Personal Financial Trainer, has been assisting families for over 28 years.  Mr. Rogers started his career as an Account Executive at a full service investment brokerage firm and later moved into advising individuals as a Personal Financial Officer at a local savings bank.  He started his own independent Investment Advisory firm in 1988.  Jerry has published articles on retirement investing in the Charleston Post and Courier and has been featured in the Dow Jones Investment Advisor magazine.  Over 50,000 people have heard him on “WTMZ’s Senior Moment”.

If you are feeling overwhelmed by the issues facing most families: finding the best way to put your hard earned money to work, understanding how much you need to save for retirement, paying for college education, the best way to declare for Social Security benefits, how to properly fund your 401k, etc.,etc.,etc. I CAN HELP! Call me at (843) 552-5444 or send an email to:


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