What happens to the Private Annuity Trust at the Annuitant’s death?
A. At the death of the Annuitant the income payments are passed to the surviving spouse (this only occurs in joint annuities). At the death of the 2nd spouse, annuity payments cease and are voided. The remains of the assets in the Trust will pass to the heirs/beneficiaries according to the provisions of the Trust. The beneficiaries may be paid out immediately, or may receive payments over a pre-specified period of time. The trust may be responsible for any unpaid taxes that remain. Because the assets in a Private Annuity Trust are considered “outside your estate”, the Trust’s proceeds pass to the heirs/beneficiaries, free from Estate Tax.
