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Securities and Annuities

Annuities are the type of investment that sounds too good to be true: You invest a certain amount, you receive a tax-deferred payment from the annuity for a fixed number of years, and there is even a death benefit.

Contact a Bay Area attorney at The Evans Law Firm at 415-441-8669 or 888-50-EVANS or info@evanslaw.com to schedule a free initial consultation to discuss questions about annuities.

San Francisco Attorneys, Protecting Asset Value Through Strategic Tax Planning

Although annuities are promoted as a good basic investment, there are some major differences between annuities and stocks or mutual funds. Annuities usually have a period, usually seven years, during which the annuity cannot be cashed in. In other words, you are stuck with the annuity for at least seven years. Not every annuity will hold its value. A “variable” annuity is actually a collection of mutual funds that may substantially lose their value in a bearish stock market.

The tax advantages of annuities often are canceled out by the high fees charged by the institution selling the annuity. Annuities can also mean additional income taxes for heirs of the person who buys the annuity because the annuity does not offer a “step-up” in basis when it is inherited, unlike securities and real property.

If the benefits of purchasing an annuity outweigh potential disadvantages, there are some things to remember:

  • Shop around to find an independent financial adviser who doesn’t rely on commissions for his or her livelihood.
  • Look for an adviser who charges an annual percentage of the funds that are being managed for you.
  • If you decide to get an annuity, read all of the information that you are given.
  • Do not rely on oral statements about the annuity from the salesman.
  • Ask some hard questions about the annuity, including the “lock-in” period, and the chances of losing part of your investment, the commission and the internal expenses.

The Evans Law Firm Serves Oakland and Other Communities Throughout California

Please call 415-441-8669 or contact us online via e-mail to schedule a free initial consultation. Our San Francisco lawyers provide tax planning assistance to clients in communities throughout the Bay Area and Southern California.

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