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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Estate Law
Satisfied Customers: 118255
Experience:  Experienced in Trust and Succession Law, including Louisiana Laws
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If the beni of an annuity owned by an irrevocable trust is

Customer Question

If the beni of an annuity owned by an irrevocable trust is listed as the irrevocable trust itself, does the annuity lose its tax free status.?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
If the beneficiary of the annuity or owner is a "Non-natural entity" (not a human being, such as a trust, partnership, corporation), then the annuity is not treated as a tax-deferred annuity, so any earnings will be taxed to the annuity owner/entity as ordinary income during the current year even if the earnings haven't been distributed. So, yes, if the owner or beneficiary are non-human entities, the tax free status is lost.