I am just about ready to hire a professional hit man. The problem is I don't quite know who to direct the "hit" at.
As those that follow my periodic annuity rants know, my father opened an annuity in 1995 with the insurance money (whole life policy) from his wife/my mother. The annuity was supposed to be for his five children that would be available when the oldest reaches 59 1/2. I'm now going to share more details and see if anyone has any advice.
My sister was my father's POA and executor. He set her up with his POA shortly after my mother passed away. About the same time he wandered into WaMu and asked about "investing for his children." The obvious answer for a man who had limited financial skills was, of course, a variable annuity. The initial "investment" was $65,000.
Fast forward to 2000. My sisters discovered the annuity. Even they knew it was bad. They tried to get him out of it but the penalty was more than they were willing to lose in assets. It was 10% and the annuity had grown to $182,736. Remember that number because we will revisit it.
More upsetting to them and my father was that the annuity was only in the name of my youngest sister. When my father set it up, the investment "professional" didn't bother with all the extra trouble of putting in any of the other kids on the contract. My trusting father obviously didn't read anything.
In 2002 at the suggestion of another WaMu investment "advisor" the ownership was supposedly transferred to all 5 children. We signed a document where my sister transferred her ownership and we all rolled it over to AIG. I'm sure a commission was involved somewhere but no telling. My father died shortly thereafter.
I recommended dumping the annuity and selling out. My sisters were again against paying the cancellation fee. The figure thrown around at the time was 5%. They didn't see any reason to pay the fee when my oldest brother would be 59 1/2 in December 2008.
My youngest sister has repeatedly said that when we cash out of the annuity it has to be through her social security number and she'd have to pay the taxes. She'd then send us each our share. That seemed wrong to me since we were now all co-owners. I decided to risk her wrath and do some snooping.
I called the WaMu agent who was out last week. I did get the assistant who was very helpful. She initially looked at the change of ownership paperwork she had in her file and said it would all be done on individual SS numbers. Everything looked good and there shouldn't be any problem. She then said that she'd double check with AIG to make sure.
AIG (may they all burn in hell) says that the change of ownership paperwork is nice but they don't care. The annuity is in my sister's name only. It is all her money and, if she dies, her heirs. It also now can not be withdrawn until she is 59 1/2 without penalty. She's a good 9 years from there. The penalty per AIG is now 10%.
Just to cheer me up some more the value as of 11/12/08 is $143,604. The annuity must be in some of the worst possible mutal funds in the world or be covered up in fees (or both).
The assistant (who's not on the hit list should I move forward with that) said that in the past a tax accountant can sometimes change things by going back to the "original intent" of the person that purchased the annuity. That tells me paperwork screw ups must be pretty common. She also gave me the name and number of the AIG contact which I intend to call Monday.
I think it's time to cash out anyway and pay the fee. One sister and two brothers are on board. I've not been able to contact my yougest sister (the "owner") to see where she's at. It's obvious we really don't have any rights if she wants to hang on.
Any thoughts? Does anyone have experience with "original intent" changes to annuities?
As those that follow my periodic annuity rants know, my father opened an annuity in 1995 with the insurance money (whole life policy) from his wife/my mother. The annuity was supposed to be for his five children that would be available when the oldest reaches 59 1/2. I'm now going to share more details and see if anyone has any advice.
My sister was my father's POA and executor. He set her up with his POA shortly after my mother passed away. About the same time he wandered into WaMu and asked about "investing for his children." The obvious answer for a man who had limited financial skills was, of course, a variable annuity. The initial "investment" was $65,000.
Fast forward to 2000. My sisters discovered the annuity. Even they knew it was bad. They tried to get him out of it but the penalty was more than they were willing to lose in assets. It was 10% and the annuity had grown to $182,736. Remember that number because we will revisit it.
More upsetting to them and my father was that the annuity was only in the name of my youngest sister. When my father set it up, the investment "professional" didn't bother with all the extra trouble of putting in any of the other kids on the contract. My trusting father obviously didn't read anything.
In 2002 at the suggestion of another WaMu investment "advisor" the ownership was supposedly transferred to all 5 children. We signed a document where my sister transferred her ownership and we all rolled it over to AIG. I'm sure a commission was involved somewhere but no telling. My father died shortly thereafter.
I recommended dumping the annuity and selling out. My sisters were again against paying the cancellation fee. The figure thrown around at the time was 5%. They didn't see any reason to pay the fee when my oldest brother would be 59 1/2 in December 2008.
My youngest sister has repeatedly said that when we cash out of the annuity it has to be through her social security number and she'd have to pay the taxes. She'd then send us each our share. That seemed wrong to me since we were now all co-owners. I decided to risk her wrath and do some snooping.
I called the WaMu agent who was out last week. I did get the assistant who was very helpful. She initially looked at the change of ownership paperwork she had in her file and said it would all be done on individual SS numbers. Everything looked good and there shouldn't be any problem. She then said that she'd double check with AIG to make sure.
AIG (may they all burn in hell) says that the change of ownership paperwork is nice but they don't care. The annuity is in my sister's name only. It is all her money and, if she dies, her heirs. It also now can not be withdrawn until she is 59 1/2 without penalty. She's a good 9 years from there. The penalty per AIG is now 10%.
Just to cheer me up some more the value as of 11/12/08 is $143,604. The annuity must be in some of the worst possible mutal funds in the world or be covered up in fees (or both).
The assistant (who's not on the hit list should I move forward with that) said that in the past a tax accountant can sometimes change things by going back to the "original intent" of the person that purchased the annuity. That tells me paperwork screw ups must be pretty common. She also gave me the name and number of the AIG contact which I intend to call Monday.
I think it's time to cash out anyway and pay the fee. One sister and two brothers are on board. I've not been able to contact my yougest sister (the "owner") to see where she's at. It's obvious we really don't have any rights if she wants to hang on.
Any thoughts? Does anyone have experience with "original intent" changes to annuities?