Legal Question in Wills and Trusts in California

I live in California and my Father has passed and has an Estate Trust for the 4 kids. My sister and I have an annuity that was left to only my sister and I. The annuity amount is over a million and I have the option for a lump sum payment or a 5 year annuity payment. I'm concerned about taxes and on the form they have a space to withhold a percentage for federal and state taxes. I've heard that if you take the lump sum it is not taxable. There are other smaller annuities and life insurance policies also . Some are left to the Trust and a couple are left to all 4 kids. What are my options? Is the lump sum tax free both federal and State?


Asked on 11/14/15, 3:56 pm

1 Answer from Attorneys
William Christian Rodi Pollock

The lump sum is NOT tax free for an IRA or an annuity. It is subject to income tax. The beneficiary designation overrides the trust as to who is the beneficiary, but this may cause disputes. Is it intended only the 2 of you receive it? Was this a mistake?

I would suggest you seek estate planning counsel or a CPA to discuss the tax options and the dispositive plan.

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Answered on 11/16/15, 11:06 am


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