What role do beneficiaries play in annuity estate planning?

Beneficiaries play a significant role in annuity estate planning, particularly in terms of avoiding probate. When an annuity owner passes away, the assets in the annuity generally transfer directly to the designated beneficiaries outside of the probate process. This means that the benefits do not need to go through the court system, which can be time-consuming and costly. By designating beneficiaries, the annuity owner ensures a smoother and more efficient transfer of funds to loved ones, allowing them to receive the benefits promptly without the delays associated with probate.

The other options do not accurately reflect the role of beneficiaries in annuity estate planning. For example, it is not true that beneficiaries have no role at all; their designation is a key part of ensuring the intended parties receive the assets. While tax implications can be a consideration in broader estate planning, beneficiaries alone do not secure tax advantages for the estate as a whole. Additionally, beneficiaries do not manage the annuity during the owner’s lifetime; rather, they are only involved once the annuity owner has passed away.