Question about annuity policy? Get free advice!

Questioner

My brother passed away a few months ago. He left me an annuity policy. I can buy this out. My question is whether the amount that is then released is considered income or assets for tax purposes, this in connection with rent allowance etc. Or could I pay it out in monthly installments instead of buying it out, and if so, over how many months?

Lawyer

First of all, my condolences for your brother. The surrender value is considered an asset and is normally paid out in installments to the insured on the end date. In the case of earlier surrender, there is no payment in installments but a lump sum.

Lawyer

This is seen as assets in box 3, so if you exceed the rent allowance limit, which is 25,000 for a single person, you are not entitled to this allowance. In that case, it is better to park the assets in a new policy and annuity or ensure that you stay below the limit.

Questioner

According to the tax authorities themselves, the amount released falls under income in box 1. Now I don't know anymore....

Lawyer

Normally, the terms to be paid out of an annuity policy are considered income. Now that you want to buy out, you will receive the amount at once that will become part of your assets, unless there is a clause (depending on the type of policy) that stipulates that the buyout is paid out in terms. If you want, you can email me the policy so that I can assess it.

Questioner

I don't have the policy in my possession. Isn't it true that the released amount is first income and if you don't spend it then, it only then becomes part of your assets?

Lawyer

In principle not. You may want to ask the insurance company which policy exactly is involved.