My sister and I inherited an annuity from our father. On the form 712 it states the value of contract at decedant's death as (1) Date of death value of contract- 450,000; (2) Remaining Investment in Contract-200, 000.
After speaking with the company, I'm still not sure of what this means. My understanding is we will divide the inheritance equally and 250,000 is subject to income tax but the 200,000 is not. Is this correct?
Also, we have three options to recieve the funds. Lump sum, lifetime payments or monthly payments. The representative said 99% of people take the lump sum.
Neither of us have a huge need for the money right now and would rather see it grow. Lump sum would subject us to a huge tax payment, right? We both have adequate IRA funds on our own through our employment which will end up in annuities, so we don't see the need to have another annuity. Is the monthly payment our best option? Does it make sense that we would take that and reinvest in higher risk?