J.G. Wentworth Analysis: What Do You Need to Know About Death, Taxes and Annuities?

BRYN MAWR, Pa., May 2, 2007 (PRIME NEWSWIRE) -- Never die with an annuity. That's a rule of thumb followed by most financial advisors when speaking with their clients about estate planning -- but not one that most annuity holders know when they first approach estate planning. For example, did you know that the inclusion of an annuity in the estate-tax calculation can result in double-taxation -- estate and income -- subject to a partial offset for the estate taxes?

"With more than $1.8 trillion of assets backing annuities in the U.S. alone, according to industry estimates, annuities have become a major personal finance tool for investors looking to lower their tax profile and plan for retirement," said Michael Vaughan, Managing Director of the J.G. Wentworth Annuity Purchase Program. "However, when considering transferring wealth, annuities may complicate estate planning."

How can owning an annuity complicate estate planning? Vaughan makes the following points:

 * The fact that annuities can pass to beneficiaries outside of the
   probate process leads to the common misperception that annuities are
   not included in the estate transfer tax calculation.
 * The estate can be forced to pay up to 46% of the value of an
   inherited annuity to estate taxes even if the payments coming due
   from that annuity are stretched out for years into the future.
 * The interest built up inside an annuity may be taxable to the
   beneficiaries at their ordinary income tax rate upon distribution of
   the annuity proceeds.
 * The emerging secondary market for annuities can provide more
   flexibility and control to annuity owners and their heirs as they
   navigate the tax issues related to the transfer of annuities from 
   one generation to the next.

About J.G. Wentworth

For more than 15 years, J.G. Wentworth has been a leader in purchasing annuities, structured settlements, and other deferred payment streams from individuals. During this time, the company has purchased over $2 billion of future payment obligations. For eight straight years, the company's annuity-backed notes have been rated AAA by Standard & Poor's and Aaa by Moody's. J.G. Wentworth is based in Bryn Mawr, PA. For more information about J.G. Wentworth, go to www.jgwentworth.com.