There was a post recently in which this type of investment was mentioned. I remember because I posted my "butterfat and skim milk" analogy. In any case there is a research paper on them now at the TIAA-CREF Institute web site and you will find the paper at this Link if the topic is of interest to you.

Ray 

Ray -- Thanks for posting that.

I'll paraphrase a sentence from your link that is bothering me -- One of the risks inherent in variable annuities is the inability to leave an estate.

My wife and I intend to leave my entire accumulation to our son (86.31% Traditional Annuity - guaranteed; and 13.69% TIAA Real Estate - variable.

In Year 2000, we met jointly with our estate planner and accountant, and the attorney worked out a " generation-skipping trust" for us by means of which my accumulation can pass intact to our son.

In such a trust, the assets are divided in half at the death of Spouse A and that half of the accumulation  goes into a "pot," for lack of a better word.

Spouse B lives off other income. 

Then at the death of Spouse B, the other half of the accumulation goes into the above pot and passes on intact to our son who can then take distributions according to his age at the death of Spouse B.

In 2005, we met again with our estate planner and accountant, reviewed everything, and left content that we had done what we set out to do.

But the sentence I paraphrased from your link leaves me a little worried. Will my accumulation in fact pass as we set it up (or thought we had), or is there truly an "inherent risk" that I've not taken into account?

I'll definitely review this situation with my WMA and our attorney (who's extremely competent by reputation).

Has anyone else done essentially what my wife and I have done and, if so, does the paraphrased sentence in Ray's link trouble you?

I'm looking for anecdotal and "thinking out loud" ideas from others who may be in the same boat -- not legal advice or asset allocation advice and the like.

Thanks in advance for any thoughts before we see the WMA and attorney.

 

Our trust is similar but different. Ours is a living trust while both are alive and at the death of the first it becomes an irreversible trust. At the death of the first of my wife and myself the survivor will have the option of declining any part of the inheritance from the living trust and that which is declined is passed on to our children.

It has been a while so I am a bit rusty on the tecnicalities of the trust thereafter. But I believe once the irrevocable trust is in place the survivor can draw upon its assets for whatever expenses she/he will have. Upon the death of the second of us, the remaining assets in the irrevocable trust go to the children.

We put all of our investments and our home into the trust; very little was left out.

The inheritance account I have mentioned quite a few times, which is about one-third of our total investments, will be declined by the survivor; we have agreed on that.

Don't know if this answers your question but it does describe our estate plan in general terms as I remember them.

I think the bold face text your referring to refers to an annuitized principal that has been converted into a single or two life annuity with T-C. In it, unless one has a guarantee period in place, if both annuitants die then the assets "remaining " (unpaid distributions because both beneficiaries are dead), become the property of TIAA - there is no remainder for an estate. I

f you do not annuitize and hold variable annuities I do not believe there is a problem. The remaining investment will be distributed in accordance with the beneficiary designation that was set on the account.

Obviously I am not a lawyer or particularly knowledgeable about estates and estate law; so there is no guarantee I have the above correct!

Ray 

Sounds like a common misconception- if you have a variable annuity , with a death benefit , and you are taking just the 5% GMWB you will leave an estate in most cases.

only those who annuitize annuities leave no estate.Either by purpose or by accident.

The morningstar-ibbotson-study sponsored by ING has a great explanaation of this

you can also get it at http://www.lfsadvisors.com

Although Rubiosa mentioned "accumulation", it would be clearer to know for sure that he means "not annutized".  But I think that's what he meant, and that Ray was talking about annuitized sums of various kinds, not just TIAA Traditional.

I thought I should post a quote from my most recent TIAA Contract, from 2003.  It has many pages of irritatingly overlapping changes and endorsements.  But here's the one you want (boldface in the original):

Endorsement to TIAA Retirement Annuity Contracts, Effective Date: July 1, 1994

...Two new methods are add ed to the Methods of Payment of the Death Benefit provision:

Single-Sum Payment: The Death Benefit will be paid to your Beneficiary in one sum.

Minimum Distribution Annuity:  The .... 

Of course there are a lot of provisos, including IANAL.  This is for an IRA contract, although the endorsement sounds like it could well be for all forms of contract.  And the definition of what is a "Beneficiary" within a trust (and how property passes with death in your state), and TIAA being a NY State insurance company ...

But it certainly sounds like a real-person Beneficiary wouldn't even have to wait 9 years and a day to get hold of the TIAA Traditional part of your accumulation.

Tim 

Here's a word from the bleachers.

TIAA Variable Annuity Accounts are NOT the same as ANNUITIZING.

Annuitizing is a permanent single decision in which you turn over your money to the insurance company which places a bet on how long all of their annuitants will live. You become part of a pool who have bought an agreed upon income (more or less) for the rest of your life.

The CREF accounts and TIAA Real Estate are called Variable Annuity Accounts, but you can think of them as Mutual Funds.

TIAA Traditional is another Annuity that has several forms, but it resembles a Long Term Bond, in that it has guaranteed features which often makes it more desireable than a Bond fund which fluctuates and can even lose money.

Sy

"Only those who annuitize annuities leave no estate."  Sorry: you're wrong under some circumstances.

Example: a person, like me, annuitizes monies with a period certain and dies before the period certain has concluded.  What's the effect for beneficiaries plainly stated in annuity contracts?  The commuted value (defined in contract) is distributed to beneficiaries in one of two ways: as monthy payments or as a lump sum.

Father's (and lawyer's) advice to beneficiaries: stretch the payments.  Cheers. Bob U. 

Bob is right of course but I thought I had answered this is my post with the following:

"I think the bold face text your referring to refers to an annuitized principal that has been converted into a single or two life annuity with T-C. In it, unless one has a guarantee period in place, if both annuitants die then the assets "remaining " (unpaid distributions because both beneficiaries are dead), become the property of TIAA - there is no remainder for an estate. " 

Guess I should have emphasized it with bold print. The key of course is if you want to leave an estate take a two-life annuity, preferably with a "guarantee perioed." Be aware however, that the availiability of a specified guarantee period, such as the 20-year one, depends on the age of the annuitant and it is difficult to get a clear answer on that, at least is has been for me when I asked at what was the last age year for me in which I could annuitize with a 20-year guarantee. At the end, I began to believe it is age 77.

Ray

Ray,

I didn't mean to undercut anything you said.

I trust all is well with Mom, Dad, and new grandchild--and, of course, the grandparents!.  Bob U. 

Bob,

I did not take it that way. This thread has wandered and I wanted to be sure this question had been properly answered. I doubt, however, that all readers ever understand some of the basics about annuities, annuitization, and variable annuity accounts. There seems to be a never ending need for repetition. If anything could use a FAQ, it would TIAA-CREF nomenclature!

Ray

Yes things are fine here and the grand daughter is charming; grandson is pushing five and that of course puts him in another category! In additional I made a two day trip to Storrs, CT to visit a good friend I had not seen for 20 plus years and that was most enjoyable. The discussion wandered to managing investments and I passed on the recommendation I had received via you. It may well be that he and his wife will go the same route we have with management of our inheritance account in which case I owe you a second "thank you!"

Do hope to see you here (AZ of course) sometime this autumn if at all possible.

Ray

Thanks to everyone for your input. Your posts will help us ask better questions when we meet with our WMA and attorney.

Sy interpreted my ambiguously-worded post correctly. We have other resources -- Social Security, wife's state teacher retirement, farm income, etc., and do not foresee annuitizing any of my total accumulation (roughly 85% TIAA traditional and 15% TREA - no CREF).  

Frankly, I'm bewildered by the intricacies of trust law, and am resigned to depending upon our attorney and WMA to get it right.

For any who may be interested, I'll share what I learn with you as our review process progresses.

I admit I did not read the Benny Goodman article and it may be original source of the article available via the web page but here is the Link to the latter.

My apology if the linked article is indeed a variation of the Goodman article but I thought it might be worth presenting here. 

Ray 

Sorry for the spelling error in the above post! :-( !

Ray 

Interesting link, and thanks, Ray.

It took me a while to find your typo.

It took no time at all, though, for my retired English teacher wife to find a grammatical error in the article itself.  : ^ )

Life annuities issued by the Teachers Insurance and Annuity Association of America (TIAA), for example, provide income that lasts as long as the policyholder, or his or her spouse or partner, are alive.

Bob's an English prof and may disagree.

He is indeed but if I remember correctly he is an English Lit specialist. However, we will let him speak for himself! :-)

Ray

Yeah, the typo was "hidden in plain sight" and I have to admit, those can be difficult to find as they are frequently areas in which does not look - translated, do not pay much attention to! 

Let's not make too much of typos. If we do, we may never get around to a meaningful subject.

For example: Find the typos and grammatical errors hidden in plain sight below :~)

Yeah, the typo was "hidden in plain sight" and I have to admit, those can be difficult to find as they are frequently areas in which does not look - translated, do not pay much attention to! 

Sy

Well, English profs are supposed to know how to write and speak in English, but this guy's expectation of perfection--given the fluid history of our language (our idea of "grammar" undergoes many changes)--is nil. I've had copy editors make changes that made no sense to me, but I never let that obsure the bigger picture--i.e., publication. I consulted my wife who ran a Literacy Center and she agrees that TIAA should have said "is" in reference to the policyholder. And Sy is correct. If Ray had changed "those" to "typos" the plural verb would work. But I also agree with Sy that we shouldn't obsess about these matters when we are having conversational exchanges. Frankly, I think the quality of writing put out by TIAA, as well as Vanguard, is really quite good. Both companies make every effort to reach their readers without talking down to them. Enjoy the day. We're having a spectacular spring in Michigan. Bob U.