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COVID-19 Impact on Estate Planning: Overview and Action Steps to Address New SECURE Act Rules

SECURE Act Significant New IRA Rules: Overview and Action Steps to Change Your Estate Plan

The Setting Every Community Up for Retirement Enhancement Act of 2019, called the “SECURE Act” makes significant changes to how IRAs and certain retirement benefits must be treated post-death.

These changes are so significant all such plan holders should review their wishes and how their estate plans may be affected. This may result in:

  • Revision of beneficiary designation forms.

  • Revision of wills and trusts that include provisions creating so-called conduit trusts that had been intended to hold IRAs and preserve the stretch IRA benefits while the IRA plan holder is still alive.

  • Complete rethinking and restructuring of the planning for the IRA account. This might include:

    • designating a charity as a beneficiary of the account and perhaps using life insurance or other planning steps to address the economic value of what is given to charity.

    • Another possible alternative is paying the IRA balance to a Charitable Remainder Trust (“CRT”) on death that will stretch out the distributions to the beneficiary of the CRT over that beneficiary’s lifetime under the CRT rules. That plan might be paired with a life insurance trust to replace the assets ultimate passing to charity under the CRT requirements.

Quick Look at What the SECURE Act Does to IRAs:

  • Death of the Stretch IRA

  • Exceptions from the 10-Year Rule

  • Revision of Beneficiary Designation Forms

  • Revision of Wills and Trusts

  • Change in Age for RMDs to Begin

  • Contributions Without Age Restriction

  • More Liberal Withdrawal For Birth and Adoption Costs

Learn more here. (link to full article)


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