The SECURE Act and Estate Planning

The SECURE Act and Estate Planning

  • June 5, 2019

Editor's Note: The SECURE Act became law December 20, 2019.

Click here for updated information on this law and how it will impact Estate Planning. 

Attorneys Sarah J. Kons and Peter B. Harbach recently appeared on WFRV's Local 5 Live to discuss the SECURE Act and its potential impact on Estate Planning.

Millaine Wells: Welcome back. A bill that made headlines in May when it got broad approval in the U.S. House of Representatives is headed to the Senate.

Lisa Malak: And passage of the SECURE Act is likely. So how will it impact you? Sarah Kons and Peter Harbach, Attorneys with Hooper Law Office are with us. Good morning.

Sarah Kons: Good morning.

Lisa Malak: All right. So Sarah, let's start by what is the SECURE Act?

Sarah Kons: It's a bill that passed that, like you said, passed the House recently. The Senate is reviewing it. There are a couple of versions of it that are being reviewed right now. And essentially what it does it creates a lot of change around retirement savings. The motivation behind it has to do with encouraging people to save for retirement, encouraging small businesses to set up retirement planning for their employees, and also they're trying to recognize the fact that life expectancies are longer and people are now living longer in retirement. So there are some pretty significant changes around these accounts that they're proposing some of the biggest we've seen in the last ten years.

Millaine Wells: So how might this act impact Estate Plans?

Peter Harbach: So presently when you pass away, and you leave an IRA to somebody other than your spouse they have an option to take what's often called a tax stretch on it, which is taking required minimum distributions out over their life expectancy. Now obviously younger people have a longer life expectancy than older people. But, the version that passed the House, it's going to limit the tax stretch on IRAs to no more than ten years except for people who have disabilities or minor individuals. And so accelerating the withdrawals from IRAs to a shorter period of time probably means significantly more tax on those accounts.

Lisa Malak: So what do people need to do now to prepare for this change that's coming?

Sarah Kons: Well, because we're still waiting on what exactly some of these changes are going to be. People should stay informed, so they know what exactly gets passed. And then, making sure that they're talking to professionals ensuring that how it impacts them individually will be understood by each person. You want to have your estate plan reviewed because there are going to be some pretty significant changes that have to do with estate planning. If you're currently getting your planning done make sure that the attorney you're working with has a review process in place. So as things change, your plan can be adjusted accordingly.

Millaine Wells: And Sarah maybe if somebody has had their plan prepared years ago is your team able to take a look at that offer suggestions and make reviews and modifications now?

Sarah Kons: Absolutely. It's important to make sure that you understand how your plan works under the current law and how it impacts your loved ones when you're gone.

Lisa Malak: I heard something about every five years at least right?

Sarah Kons: Absolutely.

Lisa Malak: Peter, I know you guys have a seminar coming up. What can people expect there? Certainly, you'll cover this topic, but any topic people have questions about right?

Peter Harbach: Yes, we'll be going through everything from disability planning to traditional estate planning topics, like we were just discussing, as well as long term care expenses and how to afford those in retirement.