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Can an Annuity Have Multiple Owners?

Annuities are insurance policies designed to provide a guaranteed income for the life of the owner, called the annuitant. Normally, there is only one annuity owner. However, in some cases there are two annuity owners. These annuities work differently than ordinary annuity contracts, and often come with special provisions for the payout of the annuity's benefits.

  1. Types

    • There are two types of joint annuities. The first is called a "joint-life annuity." The second type of joint annuity is referred to as a "joint and full survivor annuity." Both annuities allow two people to own the annuity simultaneously. Generally, this is done between a husband and wife.

    Function

    • A joint-life annuity accepts contributions from either owner. The joint life annuity terminates when the first owner dies. The benefits are then payable to the beneficiary, who is normally the surviving owner. A joint and full survivor annuity continues to pay benefits after the first owner dies.

    Benefit

    • The benefit of a joint-life annuity is that the annuity provides a unified account for both individuals. This may simplify retirement planning for both annuity owners as only one contract is needed instead of two. The benefit of a joint and full survivor annuity is that the annuity keeps paying a benefit to the surviving spouse so that they don't have to worry about how to generate an income during retirement.

    Disadvantage

    • The disadvantages to owning an annuity jointly are primarily restricted to a joint-life annuity. The joint-life annuity ends when the first spouse dies. If the surviving spouse needs an income, he will have to set up another annuity contract. Additionally, the benefits will be included in the first owner's estate. If the deceased annuity owner contributed more to the annuity than the surviving owner, then income tax may be due on the contributions made by the first owner in addition to gains in the policy.

    Expert Insight

    • There are few benefits to owning an annuity jointly. The one exception to this is with a joint and full survivor annuity. If you want to pool your retirement savings with your spouse and reduce the income taxes that may be due from inheriting your spouse's retirement savings, this type of annuity may be ideal for you.

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