Annuities, a possible +Ve. (In Florida at least) - Please Control Your Excitement

[ShokWaveRider]

I know we at mostly adverse to Annuities because of Fees and a multitude of other reasons. However, I think I "may" have found a possible positive to Annuities in Florida and maybe other states.

I was reading that in case of litigation in Florida certain assets are protected, IRAs, Roths, Main Residence, Insurance Policies, Retirement SS Income and maybe a few others.

Does this make Annuities, assuming the protections offered to combat todays litigious society, attractive for some.

Here is an example:

Say one has a $5m portfolio of which $1m is cash in the bank, CDs etc. and $4m is in retirement accounts invested wherever. Would putting $1m into an Annuity of some kind protect ALL of one assets from a Law Suit?

 

[MichaelB]

Seems to me that keeping my assets invested in low cost equities & fixed income and taking out umbrella liability insurance is more practical and a lot less expensive.

 

[ShokWaveRider]

Seems to me that keeping my assets invested in low cost equities & fixed income and taking out umbrella liability insurance is more practical and a lot less expensive.

This maybe true, but what if say one's total unprotected assets are say $1m and you have $1m Umbrella policy, then the judgement is say $2m, would your $1m moneys be at forfeit in this case? All of this is purely hypothetical of course as if you have a judgement against you then buy an annuity, it would be void.

 

[joeea]

Not the way I'd go, but:
https://www.marketwatch.com/story/how-annuities-can-shield-you-from-creditors-2013-10-08

Are you concerned with an imminent lawsuit? Or are you looking for a reason to justify a purchase of an annuity you would like? Or something else?

If you are trying to make yourself judgement-proof, you need to work with an attorney and a CPA.

 

[MichaelB]

First, even in this "litigious society", a lawsuit is still a low probability event. In addition, the amount of liability coverage needed is not based on the amount of assets one has, but instead to the typical lawsuit / settlement amount.

 

[Dtail]

Seems to me that keeping my assets invested in low cost equities & fixed income and taking out umbrella liability insurance is more practical and a lot less expensive.

^^^
This is what I do and do live in Florida, but will research further.

 

[ShokWaveRider]

NAre you concerned with an imminent lawsuit? Or are you looking for a reason to justify a purchase of an annuity you would like? Or something else?

No not at all, I was just reading about it this weekend. I actually have an umbrella policy myself.

 

[teejayevans]

Seems to me that keeping my assets invested in low cost equities & fixed income and taking out umbrella liability insurance is more practical and a lot less expensive.

Depends, umbrella policies usually have exceptions to coverage.

 

[ncbill]

This maybe true, but what if say one's total unprotected assets are say $1m and you have $1m Umbrella policy, then the judgement is say $2m, would your $1m moneys be at forfeit in this case? All of this is purely hypothetical of course as if you have a judgement against you then buy an annuity, it would be void.

Even $5 million in umbrella coverage is not as much as you might think.

Also, people seem awfully flippant about the time and effort involved to actually win a court judgment.

The last one in which I was involved (personal injury claim against a business) took over 5 years after the plaintiff rejected a $2 million (IIRC) offer from the insurer.

Granted, they had significant, permanent injuries but the end result was that the plaintiff (and more importantly their family, since the plaintiff was the sole breadwinner) got bupkis at trial.

 

[pb4uski]

I know we at mostly adverse to Annuities because of Fees and a multitude of other reasons. However, I think I "may" have found a possible positive to Annuities in Florida and maybe other states.

I was reading that in case of litigation in Florida certain assets are protected, IRAs, Roths, Main Residence, Insurance Policies, Retirement SS Income and maybe a few others.

Does this make Annuities, assuming the protections offered to combat todays litigious society, attractive for some.

Here is an example:

Say one has a $5m portfolio of which $1m is cash in the bank, CDs etc. and $4m is in retirement accounts invested wherever. Would putting $1m into an Annuity of some kind protect ALL of one assets from a Law Suit?

From what you wrote, it would depend on what sort of account the annuity is in. If you directly owned the annuity it is probably the same exposure as a taxable account other than the plaintiff can only commandeer the annuity stream of payments and not a lump sum. If the annuity was owned in an IRA then it would be protected just like stocks in an IRA.

IOW, it is the form of account that is important, not the type of investment.

I'm not a lawyer, and I didn't sleep at Holiday Inn Express last night..... so YMMV.

P.S. For a relatively modest cost, my insurer has millions of reasons to provide me with a vigorous defense should I be sued.

 

[Lakewood90712]

It is my understanding that whenever a longtime member starts an Annuity thread, the member is put on ER-ORG Double Secret Probation

PS Umbrella coverage is fairly cheap, but exclusions have crept in over the years.

 

[FI_RElater]

It can’t be “Double *Secret* Probation” if it’s posted

 

[ncbill]

PS Umbrella coverage is fairly cheap, but exclusions have crept in over the years.

such as?

IIRC most of the excess risk to the umbrella is due to auto, so is DUI now excluded?

All umbrella policies I've seen have a household exclusion, but I don't believe that's anything new, so the advice I've read is to crank uninsured/underinsured to the (typically $1 million) maximum under your auto policy.