415.19 Transfer of Assets into an Annuity SR 96-02, 01/96 (AAM-A)

An annuity is any instrument which gives the right to receive fixed, periodic payments, either for life or a term of years. Annuities that can be cashed in are considered revocable trusts. To determine if the individual received fair market value from a transfer of assets into an annuity:

. Determine the fair market value of the asset at the time of transfer into the annuity.

. Using the SSA Life Expectancy Tables in the back of this Chapter, determine if the expected return on the annuity corresponds with a reasonable estimate of the individual's life expectancy in order to determine if the annuity is actuarially sound.

- If the average number of years of expected life remaining for the individual coincides or exceeds the life of the annuity, the individual has received fair market value.

- If the average number of years of expected life remaining for the individual is less than the life of the annuity, the individual did not receive fair market value for the annuity.