How the SECURE Act May Affect Your Long-Term Planning

Part of our job as estate planning attorneys is to make sure our client population is up to date on recent acts, amendments, and changes in case law that might affect their long-term planning. Importantly, the SECURE Act (“Setting Every Community Up for Retirement Enhancement”) is important to know about, as it affects the retirement and estate plans of Americans in any stage of their own planning processes.

What is the SECURE Act?

The SECURE Act is part of a major spending bill that was passed in 2019. The Act has several significant implications for those planning for retirement, and it is important for anyone engaged in long-term planning to understand its effects.

The SECURE Act’s Implications

First and foremost, the Act pushes back the age at which retirement plan participants need to take required minimums distributions from age 70½ to age 72. This essentially means that those wanting to take distributions from their IRA can wait until April 1, after the year they turn 72, to begin these required minimum distributions. Giving this cushion allows for a bit more flexibility that can end up being greatly beneficial for those wanting to use money from their IRA.

Next, the SECURE Act makes changes to an important law that allowed decedents’ beneficiaries to receive the assets to which they were entitled over a long period of time. By taking these payments gradually over a lifetime, beneficiaries could defer taxes on the money and end up receiving twice the amount of money than what they would have received via a lump sum.

The SECURE Act, however, takes away this provision, instead allowing beneficiaries to receive funds for 10 years instead of across their entire lives. The asset then becomes less valuable to the beneficiary than it would have been under the previous provision, where beneficiaries were able to stretch the money over a longer period of time.

This new ten-year cap does not come without exceptions, however, for surviving spouses and minor children. In addition, individuals that are disabled or terminally ill can stretch their assets over their entire lives, allowing them to forgo the restriction in certain circumstances.

The exceptions are complicated and situation-dependent, but they can end up saving individuals significant amounts of money. If you are wondering how these exceptions or this Act might apply to you, the best thing you can do is speak with an estate-planning attorney that can talk you through your various options.

Are You Looking for an Estate-Planning Attorney in Texas?

At McCulloch & Miller, PLLC, we provide expert legal advice and services to those in Texas engaged in the estate planning process. Whether you are planning for retirement, long-term care, distribution of your assets, or execution of a will or trust, you can benefit from speaking with someone who understands the law and understands your individual situation. For a consultation with a member of our team, give us a call today at 713-903-7879. You can also fill out our online form to get in touch with us today.

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