How Are Variable Annuities Taxed At Death? 
Variable annuities are personal property . Personal property has an owner . An owner can pass property at death in differing ways . There may be state specific issues , so generalizations are used . Strictly by the question posed : Assuming that this is a non-qualified annuity with no generational stretch planning tactics , the variable annuity will , in most states , bypass probate and pass directly to the primary beneficiary of the policy . If thats a spouse , more than likely , no taxable event will occur -LRB- assuming theres a gain -RRB- , but someone else , including children , will more than likely pay ordinary income tax on any gain . 