In some states, such as Florida, it is desirable to pass assets outside
of the surrogate’s court. There are many tools that you can use
to achieve this objective. One such tool is life insurance and annuities.
Life Insurance is the equitable transfer of the risk of a loss, from one
entity to another, in exchange for payment. Life insurance insures the
risk of a loss of life and its cash value is exempt from creditor judgment.
An annuity is a contract between you and an insurance company that is designed
to meet retirement and other long-range goals. Annuities typically allow
for tax-deferred growth of earning and may include death benefits; however
early withdrawal of an Annuity may trigger a penalty.
Annuities can come in three ways; fixed, indexed and variable. In a fixed
annuity, the insurance company agrees to pay a specified rate of interest
during the time your annuity is growing. In an indexed annuities promise
returns based on changes in an index (such as a stock price index). In
a variable annuity, you can choose to invest your purchase payments from
among a range of different investment options – usually mutual funds.
Your return will be dependent on how your investments perform.
Life insurance and annuities pass outside of probate because the monies
automatically pass to the beneficiary named– rather than through Will.