Beneficiary could create tax problem
Have client who had aunt pass away. The POA (Diane and now executor) moved money before her death in a few annuities with her as the only beneficiary, knowing full well the WIll stated she would get half and my client would get half.
Diane wants my client to agree that when she gets paid each month from the annuity, Diane will send her half of the check. were talking 1000’s of dollars.
Doesn’t this cause a tax problem (not to mention legal) since the 1099 would go to Diane and then she is going to send my client her half?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Fri, 2012-12-21 21:41
If Diane proposes to gift half the annuity to your client as an equitable adjustment for naming just herself as annuity beneficiary, the usual procedure would be for Diane to report the 1099R income on her return and then gift the half the after tax amount to your client. The gift tax exclusion is 14,000 in 2013, 13,000 this year.Or Diane could disclaim part of the rest of the assets under the will and your client would receive those additional assets in exchange for Diane retaining and reporting 100% of the annuity.