I was left a 25,000 annuity in a will from a family friend. What to do?

Question

The annuity is worth a little over 75,000. It will be divided between me and my 2 sisters. Each of us have the option to take monthly payments, (72.00) or get the lump sum. I am really hurting for money, so this is a blessing. My question is how to find out how much I'll be taxed for my 25,000 cut, or am I better off to take out the 15,000 I really need, and re-invest the other 10,000 in another annuity? Thanks. Jeff

Answer 1

An inheritance is generally not taxed - take the lump sum, use what you need and invest the rest.

Answer 2

The US does not have a Federal inheritance tax. Any estate tax should have been paid by the estate, before your share is available. You should check to see if your STATE has an inheritance tax, which may be due even if you don't cash out the annuity. If I inherited an annuity of any amount, I would take the cash option. Any portion I did not need immediately, I would reinvest in mutual funds, NOT another annuity.

Answer 3

a good tax accountant or perhaps financial planner should advise you.

an annuity can be worth less if cashed in early. You need to find out its current value if taken in cash and plan for that. I believe gifts to a certain amount are tax free , but a tax accountant can tell you exactly.

Fot $10,000 a CD at a bank might be just as good an option for investment.

Answer 4

The estate usually pays the tax unless other arrangements have been made. If you invest the money in stocks or CD's, you will be taxed on the interest or increased value. But the original money will not be taxed. You should contact the executor of the estate to find out how the taxes are being handled.

Answer 5

is there still an inheritance tax?? I thought they did away with this in the US..you likely need to speak with an a professional.

Answer 6

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