Some people hate annuities (or more specifically the loads, surrender fees, and other attributes that go along with them). Other people love annuities. Whichever side of the fence you're on, consider the possible use of an annuity in the following situation. You want to provide a monthly or quarterly cash flow to a specific heir that you believe won't be fiscally responsible. The money you want to leave is too small to justify naming an institutional trustee, and the beneficiary is too difficult to burden another family member with the responsibility of trusteeship or care. What if, instead, you direct your executor to buy an immediate annuity following your death for that beneficiary? The annuity is structured to pay a monthly or quarterly stipend, with some inflation protection, and expressly prohibits the beneficiary from cashing it in. For a beneficiary age 60, such an annuity with 3% compounding, could pay about $1,100/month. You would ensure a cash flow to your heir, while not having to deal with burdening someone with becoming a trustee.
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