A new lawsuit in Michigan raises questions about what happens when unwanted annuity beneficiary changes affect income taxes.
Laura Gritu, the plaintiff in the suit, has accused two life insurers, Symetra and Pacific Life, of changing annuity beneficiary designations without getting permission from Nick Gritu — who was the owner of the annuities and her father — before retitling the annuities into his trust, the Nick J. Gritu Revocable Trust.
"As a result of the Defendants' actions, the Gritu Annuities' death benefits were funded into the Trust, causing them to incur unnecessary taxes," Laura Gritu alleges in a complaint filed May 22 in a state court in Oakland County, Michigan.
Gritu is accusing the insurers of negligence and has asked the court to award her damages.
Representatives for Gritu and Pacific Life could not immediately be reached for comment.
A Symetra Life representative declined to comment.
The annuities: Nick Gritu lived near Detroit and was the owner of Solomie's Bar in Dearborn, Michigan, for about 50 years.
Nick Gritu bought a multi-year guaranteed annuity, a Symetra Select 5 Annuity, and a deferred fixed annuity, a Pacific Explorer contract.
The Symetra annuity had a value of about $190,000 in 2021, and the Pacific Life annuity had a value of about $148,000.
The beneficiary designations: Laura Gritu was one of Nick Gritu's three children and the only child who lived in the Detroit area. In 2021, Nick Gritu named her as the sole beneficiary of the annuities.
One of Nick Gritu's other children, Lynn Gritu, filed a petition in the Wayne County Probate Court in 2021 to challenge the beneficiary designation.
A probate court judge resolved the dispute by denying Lynn Gritu's petition to change the beneficiary designation. The judge also ordered that Nick Gritu's assets be moved into the trust. Laura and Lynn Gritu were each designated as beneficiaries for 50% of the trust assets.
Nick Gritu died Nov. 18, 2022.
Laura Gritu says she learned of the annuity beneficiary designation changes in January 2023, when she was winding up her father's affairs.
The annuity issuers should have transferred ownership of the annuities into the Gritu trust while leaving the original beneficiary designations in place, Laura Gritu says.
Because of the beneficiary changes, Laura Gritu received only half of the death benefits from the annuities and the benefits she received were taxed, according to the complaint.
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