Brighthouse Annuity

[BuysToys]

My mom recently passed away and her IRA was in a Brighthouse Annuity. I'm trying to figure out what is best for my dad: leave the annuity as is, roll everything into Vanguard, a combination of the two, or something I'm not thinking about at all. There were, what we thought were good, reasons at the time to put mom into the annuity. If she was still living, we'd likely just leave it alone at this point.



I looked online for the financial report and found nothing that matches exactly. I do have a listing of the companies being invested in. It seems like a lot for a 5% guaranteed return. The annuity is Brighthouse Variable Annuity Series C. Maybe I'm just looking in the wrong places.



I haven't called yet, but I suspect there is a penalty for closing the account. I have a maturity date of 11/1/2032 on the forms. I don't even know what questions to ask. We (the kids) would like to put the money into something simpler such as Vanguard Total Stock Market and Vanguard Total Bond Market. It would probably be a 60/40 or 50/50 mix. Dad is 81 this year if that makes a difference to anyone.


I'd appreciate any guidance on how to handle this. I'm in over my head when it comes to dealing with my parent's income.

 

[pb4uski]

Your mom has a variable annuity... which is simply mutual funds in an annuity wrapper with some bells and whistles. I agree that it would probably be just as well in a mix of stock and bond ETFs or a balanced ETF or mutual fund.

There may not be any surrender charges if she has had it a long time. Usually, surrender charges expire after 7-10 years, worst case 15 years. Also, there may be a window of time after her passing that you can surrender penalty free even if it is still in the penalty charge period... check your contract.

It probably wouldn't hurt to call Brighthouse and find out what your options are, but be prepared for a pitch to keep it with Brighthouse. If you know the AA of the IRA then you could compare the growth to a similar AA mix of index funds or ETFs.

 

[JeffyD]

I am sorry for your loss. My parents are long gone, but remain in my thoughts daily. In that sense, they are still guiding me, still parenting me through life.

I suspect one of the first avenues is to contact Brighthouse, explain the situation, and ask them about what your options are. At the same time, I think you’ll want to invest in some reading glasses for that annuity so that you’ll be able to understand the options once you see them.

If Brighthouse contracts are muddled, and this is a significant amount of value, you might want to hire a lawyer who specializes

 

[chassis]

I’m sorry to hear of your loss.

Another option is to do nothing. Status quo has benefits of no effort and certainty of outcome.

Personally I don’t like annuities. But for your father’s situation it may not make a material difference during his remaining years, whether he keeps the annuity or does something else.

What are the fees and charges?

 

[Luvtoride]

Buys, sorry for your loss. Do you know if your parents had a Financial Advisor who assisted them with the Brighthouse Annuity? These usually require a licensed agent to purchase on behalf of the owner. If you can still get in touch with that person, they might be the best source (regardless of their "skin in the game") to advise as to your options and any costs to surrender the annuity for another investment type.
Good luck.

 

[BuysToys]

I'm still trying to piece together the fees and charges. It looks like they're a little more than 5% at first glance, but I need to dig further. I don't have all her quarterly statements, so I'm putting together things to try to come to some answers.


There was a licensed agent involved and we are in the midst of doing the paperwork for him to convert it over to my dad. I think dad will have to take larger RMDs than mom did. She hadn't taken her RMD for this year yet.

 

[FREE866]

Variable annuities. Ugh. These products should be banned.



I learned all about them embarrassingly only like 5 years ago as my mom had one and my sister did as well. They are a fancy insurance product that invests in costly mutual funds in addition to hidden fees such as annual fees, sub account fees, M&E expenses, and possible surrender charges when liquidating.



You can call Brighthouse and ask them for the fee breakdown, but typically you're looking at 2-5% per year and that's in addition to the mutual fund fees that are baked in. I would suggest rolling into an IRA , deciding what AA you want and just invest accordingly in stock/bond low cost ETF's.

 

[chassis]

A 5% charge investment is something I recommend getting out of. To me it outweighs the benefit of doing nothing/certainty of outcome. The effort to exit the investment seems worth saving the 5%.

 

[RetiredHappy]

A 5% charge investment is something I recommend getting out of. To me it outweighs the benefit of doing nothing/certainty of outcome. The effort to exit the investment seems worth saving the 5%.

I read from OP's post that it is 5% guaranteed return and don't find a 5% charge on investments.

 

[RetireeRobert]

I read from OP's post that it is 5% guaranteed return and don't find a 5% charge on investments.

Yes, that is what I thought OP meant as well. 5% guaranteed earnings.

 

[pjm-7]

This product is handled the same way as any IRA at death. There should be no penalties or fees to move or cash the contract. How old was your mother on the date of death? Had she started her RMD's yet? How old is your father? If they were under the RMD starting age you can transfer this contract into your dad's IRA with any financial provider you choose. If you dad has an existing IRA the receiving company can help you with the paperwork. There will be forms needed with Brighthouse including a copy of the death certificate.

 

[BuysToys]

Mom had started RMDs. She did not take her 2021 yet. Dad will be 81 shortly. He has no existing IRA.



We're pretty certain we're going to move the funds to Vanguard. My sister is nervous about managing them, but I'll hold her hand and help her. She's got the POA and dad is blind, so she will take action for him.