Is an annuity subject to probate at death?
Generally, no. When you purchase an annuity you will name a beneficiary. When you die, your rights under the annuity will be passed to the beneficiary and thus avoid probate. If the annuity was deferred and your beneficiary was your surviving spouse, he or she can elect to step into your shoes and allow the annuity to remain in force. If the annuity was deferred and the beneficiary was not the surviving spouse, federal tax law requires either that the amounts in the annuity be distributed within five years of the date of death or that the contract be annuitized within one year of the date of death. If you were receiving payments under that annuity, then your beneficiary (regardless of whether or not that person is a surviving spouse) must receive those payments at least as rapidly as you would have. Finally, remember that even though the annuity may escape probate, it is still included in your estate for estate tax purposes.
