Using Multiple SPIAs to Create a Legacy
Many clients have multiple grandchildren and they want to leave a legacy for each one.
Ray wants his grandchildren to remember him long after he has passed away. Ray wants to create an annual income stream on their birthday every year.
- Ray is 80 years old
- Ray has four grandchildren ages 10, 12, 16 and 18
- Available assets of $200,000 to fund a legacy for his children
How it Works
Ray purchases four joint-life single premium immediate annuity (SPIA) contracts for $50,000 each. For each contract, Ray is a joint owner and one of his grandchildren is a joint owner. At Ray’s death, the income stream continues to the grandchildren for their lifetimes.
Ray has created a legacy for each grandchild and set up the funds to be deposited from the annuity into the grandchild’s bank account on their birthdays. Ray has also included a 3% COLA increase on the annual payments.
Ray continues his legacy with a birthday present for each grandchild for the rest of their lives. The average annual starting payment per child is:
- Year 1: $683
- Year 20: $1,198.38
- Year 40 $2,164.41