Annuity Distribution Chart

On January 30, 1996, at age 65, Mr. Baker purchases a $20,000 period certain annuity to be paid over the course of 10 years. Fixed, equal, monthly payments begin March 1, 1996.

At age 65, Mr. Baker’s life expectancy is 14.96 years according to the life expectancy table for males compiled by the Actuary of the Social Security Administration. Since Mr. Baker’s life expectancy figure (14.96 years) exceeds the payout period (10 years) and Mr. Baker is receiving payments, the balance of the annuity is considered unavailable. The payments are treated as income.

On March 10, 1996, at age 65, Mr. Baker purchases a $100,000 period certain annuity to be paid over the course of 20 years. Fixed, equal, monthly payments are to begin April 15, 1996.

At age 65, Mr. Baker’s life expectancy is 14.96 years according to the life expectancy table for males compiled by the Actuary of the Social Security Administration. The payout period (20 years) exceeds Mr. Bakers life expectancy (14.96 years). Mr. Baker is unable to restructure the annuity’s payment schedule. Since the annuity was purchased after 2/18/96, the undue hardship provisions do not apply. The payments scheduled to occur beyond Mr. Baker’s life expectancy would be considered transferred property that may be a disqualifying transfer.

To calculate the amount that was transferred for less than adequate consideration, determine the percentage of the original purchase price which was transferred to fund those payments that exceed the life expectancy on the tables. (See Section 47.17.4 for specific procedures.)

On 12/4/96, Mrs. Baker purchases a $50,000 period certain annuity and names her daughter the annuitant.

Since the annuity was established after 8/11/93, it is treated as an OBRA ‘93 annuity. The full amount of the annuity ($50,000) is considered a transfer of property for less than adequate consideration.

On 6/10/96, Mrs. Baker purchases a $50,000 lifetime annuity with 5 years worth of payments designated to go to her daughter upon the death of Mrs. Baker. Mrs. Baker is 79 years old and her life expectancy is determined to be 9.67 years.
Since the annuity was purchased after 8/11/93, it is treated as an OBRA ‘93 annuity. The 5 years worth of payments specified as death benefits and designated for the daughter shall be considered transferred property for less than adequate consideration. Mrs. Baker’s monthly payments are considered income and the balance of the annuity less the death benefits are considered unavailable.

On 4/15/96, Mrs. Baker purchases a $50,000 lifetime annuity and designates her daughter to receive a cash refund (unspecified amount) upon her death. Mrs. Baker is 79 years old and her life expectancy is determined to be 9.67 years. The life expectancy tables used by the annuity company to establish this annuity determined Mrs. Baker’s life expectancy at 8 years.

Since this annuity was purchased after 8/11/93, it is treated as an OBRA ‘93 annuity. The cash refund is an unspecified amount and the annuity was annuitized to a life expectancy less than that determined by the life expectancy tables compiled by the Actuary of the Social Security Administration. Therefore, the monthly payments are considered income, the balance of the annuity is considered unavailable and the unspecified cash refund that is to go to Mrs. Baker’s daughter is NOT considered a transfer of property.

Mrs. Baker begins receiving payments from her properly annuitized annuity. She later designates her daughter as the annuitant after receiving payments for 1 year. The daughter will receive the remaining four years of payments from the annuity.

The 4 years of payments will be considered transferred income which may result in a disqualifying transfer in the future.

Mrs. Baker begins receiving payments from her properly annuitized annuity. She later designates her daughter to receive the remaining 4 years of payments to be used solely for the support of Mrs. Baker.

Since the payments designated to Mrs. Baker’s daughter are for the sole support of Mrs. Baker, this is NOT considered transferred income. The payments will be considered income to Mrs. Baker.

On 3/1/96, Mrs. Baker, age 64, purchases a $50,000 lifetime annuity with a period certain of 15 years. Her life expectancy is determined to be 19.72 years. The life expectancy table used by the annuity company to establish her annuity give Mrs. Baker a life expectancy of 18 years. She is receiving fixed, equal, monthly payments.

Since this annuity was purchased after 8/11/93, it is treated as an OBRA ‘93 annuity. The number of years of both the company’s life expectancy table and the period certain are less than Mrs. Baker’s life expectancy according to the tables compiled by the Actuary of the Social Security Administration. Therefore, the monthly payments are considered income, and the balance of the annuity is considered unavailable property.