My son was injured and permanently scarred due to a dog bite this past summer, and one of the insurance companies we went after settled with us. Hy son is a minor, but he is being awarded a pretty substantial amount of money. Our lawyer is pushing us to get an annuity for the payment for several reasons: a) tax advantage - apparently, the money can grow tax-free in certain types of annuities until he reaches adulthood; b) get all the money now, rather than a stream of payments over the next 9 years.
He has told us that after doing some research, the only way we can get the option that allows for no taxes on the appreciation of the principal, we have to purchase it from the insurance company that has settled. This sounds fishy to me, but I don't know enough to make a decision, and I'm not even sure I know enough to ask the right questions.
We also have an outstanding suit against another insurance company, and should we win that one we will probably need a similar set-up. I don't want to make a mistake that may cost us thousands over the next nine years.
I consider myself a pseudo-expert on personal finance, but I have never learned anything about annuities. Any financial experts out there that can get me heading in the right direction? Any advice I should know about?
Quote from: DemonchildrenOnTurf on February 26, 2006, 10:02:09 PM
Any advice I should know about?
You should put all the money in my savings account. I'll pm you the info.
Give it to this guy. You increase your holdings a bazillion percent!
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On a serious note, I'd go to a professional waaaaaaaaaaaaay before I'd listen to idiots like us. :D
Good luck.
Did you tell the adoption agency people about how you got a dog to attack your kid for insurance money?
Quote from: Diomedes on February 26, 2006, 10:17:06 PM
Did you tell the adoption agency people about how you got a dog to attack your kid for insurance money?
Nope... Mine and Mrs. Demon's little secret.
I think this is gonna pay off HUGE!!
Speak to an accountant you can trust. By trust I mean one that won't push any of his/her own products on you. Who better than an accountant to advise you regarding 'tax advantages'. And also...I know that lenders and Realtors like myself constantly throw the term 'tax advantages' out there.....but I also know that every individuals tax 'advantage' is different.
You may want to speak to a second accountant regarding what are the different scenarios, pros and cons and what not. Also consult another attorney to see if there is anything that isn't being covered by your current lawyer. Remember, sometimes you don't know who's working for who. So...as a check and balance, you may opt for the 2nd opinion.
Also what is 'some research'. If he's willing to provide you the sources of his 'research' then I'd feel more comfortable trusting his advise. Otherwise...consult an expert and have him/her guide you from there. I just don't trust too many people nowadays.
Anyways...I'm almost done closing on some land in the everglades. :paranoid
If you had told them, I'm not sure they wouldn't have congratulated you for your clever play.
When I used to work as a claim adjuster for an insurance company, we used to settle claims for minors and I never heard of a tax advantage for the annuity, especially an annuity from the insurance company which is paying the claim. In general, most annuities have large commissions and fees attached to them, but in this case you should be able to get it without those fees.
How is your attorney going to get his fee if you get an annuity? Does he get it off the top and the balance is in the annuity? You'd be surprised the different crap I've seen an attorney do to their client. Get a good accountant.
Ask StillOnCrack (oops, I mean Stalker). He's the one with the leased Volvo and the company Caddie. I'm sure he knows the answer.
be sure to go to an irrelevant massage boad for personal financial advice. thats the best advise you'll ever get, right there.
Quote from: MadMarchHare on February 27, 2006, 09:29:18 AM
Ask StillOnCrack (oops, I mean Stalker). He's the one with the leased Volvo and the company Caddie. I'm sure he knows the answer.
It's a Lexus, not a Volvo.
Sure, I have the answer. Find a good accountant. Don't farg with the IRS.
While the annuity will grow tax-deferred (not tax-free), there are expenses rolled into the annuity such as "insurance" and "investment" expenses. You may want to consider taking the lump sum now and dropping it into a 529 account (which also grows tax deferred but withdrawals are tax free for secondary education), or a Trust account managed by an investment professional. The 529 has a maximum lifetime limit contribution of 250k, and if the kid decides to not go to college, the money is still theirs, but the earnings become taxable.
For more details, you should definitley contact a CFP (Certified Financial Planner).
Oh yeah...just FYI, annuities are the highest commission product an investment professional can sell so always beware those peddling them.
Quote from: stalker on February 27, 2006, 10:32:22 AM
Quote from: MadMarchHare on February 27, 2006, 09:29:18 AM
Ask StillOnCrack (oops, I mean Stalker). He's the one with the leased Volvo and the company Caddie. I'm sure he knows the answer.
It's a Lexus, not a Volvo.
Busted!
Quote from: Sgt PSN on February 27, 2006, 06:12:16 PM
Quote from: stalker on February 27, 2006, 10:32:22 AM
Quote from: MadMarchHare on February 27, 2006, 09:29:18 AM
Ask StillOnCrack (oops, I mean Stalker). He's the one with the leased Volvo and the company Caddie. I'm sure he knows the answer.
It's a Lexus, not a Volvo.
Busted!
No wait, I mean HIS wife has a Lexus.
Quote from: Butchers Bill on February 27, 2006, 02:23:20 PM
Oh yeah...just FYI, annuities are the highest commission product an investment professional can sell so always beware those peddling them.
Bingo. And since I see attorneys selling services to help people get OUT of annuities, I'm pretty sure I don't want one.