My client asked this question, and I'd like to double-check what implication would receiving their father's annuity as a gift would have. Is my understanding correct that the rights to receive the payments would just transfer to my client (the child) and they'd step in the shoes of their father - the 1099-R would be issued to them and the taxable amount would be calculated in just the same way as it would for their father?
"Our father has Parkinson's and moved into a nursing home in August. We are about to engage an elder law attorney to help us on asset protection so that he can qualify for MediCal to help with the nursing home fees. One thing the lawyer mentioned was gifting $ to my brother and I, divided equally, at a rate of $10,000/day until our parents' assets fall below the required minimum, which is 130K. They own approx 1.5 million in stock, 300K in cash, and 25K in an annuity that matures in 2024. I'm not sure how to think about the annuity."
Please comment on the annuity treatment or anything to watch out for.
Thank you for your input,
MK