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Dear Liz: We were recently advised by a financial advisor to put $500,000 into a variable annuity. It is for my mother’s trust, and frankly, my mother is not expected to live past another year. The cost of the annuity is supposed to be 1% above our current fees, and there is a floor on our investment so that no matter what happens in the market, if my mother dies we would still get the $500,000 back. If the market rises, we get the higher fund balance upon her death. Articles that I read online say that variable annuities cost more, generate large fees for the seller and the survivor has to pay taxes on the distribution as ordinary income, not as capital gains. They say variable annuities are not really good, and brokers can get $30,000 to $50,000 in fees on a $500,000 annuity. What is your opinion of a variable annuity?

Answer: Run this investment past a fee-only financial planner — one who is paid only by fees from you, not commissions on insurance products. You’ll get an earful about why this investment is probably a bad idea.

Your research has turned up most of the disadvantages. One you didn’t mention was surrender charges. If the money needs to be accessed in a hurry, you are likely to pay stiff fees for doing so.

Variable annuities are designed to be long-term retirement savings vehicles, not short-term repositories for cash. If you’re concerned about the safety of your mother’s investments, talk to the fee-only planner about your options, such as moving some or all of the money to an FDIC-insured bank account.

“I know it’s boring, but the money will be there in case they need it for Mom,” said financial planner Delia Fernandez of Los Alamitos. “And it will be liquid and available at her death to help settle final costs.”

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