Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
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When you have an annuity, and it is inherited, you are taxed on the funds that you take out of the annuity, just like the annuity holder is taxed on distributions during their life
If you take all the funds out of the annuity, and pay income tax on that and leave your children a lump sum of money they will not owe income tax on it
I've heard of this thing called a step up in basis. So that the person inheriting gets the step up and doesn't need to pay the income taxes because there is no gain.
That's not on an annuity - that's on a capital asset such as stocks or real estate
do those assets need to be in a trust? If I take the money out of the annuity and by mutual funds and leave those mutual funds to my heirs does the step up apply?
The assets do not need to be in a trust. If you do take funds out of the annuity, then yes - if they inherit a mutual fund there would be no tax
that is good thanks. Does it matter which state the heirs live in?
No, it does not
Thanks, XXXXX XXXXX very helpful. Do you have an office in the MD DC area or know someone you would recommend?
No, I do not. Our site cannot make direct referrals, but I can tell you that you can look at the Maryland State Board of Accountancy or the DC Board of accountancy to locate a professional in your area
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I will , you were excellent
Thanks. The rating feature is along the bottom of the screen
Sorry it look like it wasn't enabled. Got it now.