Opinion ID: 739315
Heading Depth: 3
Heading Rank: 2

Heading: The Lincoln National Account

Text: 10 The Lincoln National account, labeled a Variable Annuity Account by the issuer, appears to be typical of the kinds of variable annuities offered primarily by insurance companies industry-wide. By its terms, the account has two distinct phases: the initial accumulation period and the final annuity period. During the accumulation period Guidry directs the investment of her purchase payments into sub-accounts, selecting them from an array of various investment portfolios. Throughout this period Guidry retains the power to control the allocation of funds among the various sub-accounts, as well as the power to withdraw some or all of the presently invested funds and to terminate the account altogether. The income earned by these funds once invested remains free of United States income tax until such time as Guidry elects to withdraw it. 9 11 The annuity period commences on the Maturity Date, or Annuitization Date. This is the title given to the date on which the accumulation period ends and the annuity period begins. The Maturity Date occurs automatically on Guidry's 85th birthday--April 4, 2018--unless before that time Guidry should unilaterally terminate the account, withdraw all funds, or exercise her option to accelerate the Maturity Date by giving 30 days' written notice. 12 At all times during the accumulation period, i.e., before the Maturity Date, Guidry bears the risk of loss on her investments within the account, has the right to vote her shares, and, as noted, has the power to make withdrawals from or even close out her account. It is only during the annuity period, which commences on the Maturity Date, that (1) the risk of loss shifts to the issuer, (2) the issuer begins making regular annuity payments pursuant to whichever payment option Guidry shall have pre-selected, and (3) the power to vote her shares, direct the investment of funds in her account, withdraw any portion of the principal or interest from time to time, or terminate the account altogether no longer belongs to Guidry. 13 The district court reached the conclusion that the Lincoln National account is not an annuity under Louisiana law by breaking the account down into its two component phases and analyzing each. As a result, the court determined that, for purposes of exemption from seizure, the account would only become an annuity, if at all, after the Maturity Date. Although we ultimately reach the same conclusion, we believe that this case merits further explanation.