The SECURE Act of 2020 (Setting Every Community Up for Retirement):

  • is changing retirement, and it may change how your wealth is distributed;
  • it may require a check-in with your estate planner to adjust your estate plan’s language and/or structure to do what you originally intended;
  • or if you’re an advisor, it may require a check-in with the estate planner and other financial professionals in your client’s sphere

Timestamps

:30 Krystal and Merrell introduce the impacts to qualified retirement plans and what changes after the planholder passes away. What should advisors expect from other advisors in response to the SECURE Act?

1:30 The rules before 2020…inherited IRAs, rollover IRAs, and ability of a beneficiary to stretch distributions over their life expectancy

2:33 As estate planning attorneys we considered passing wealth to another generation in IRA trusts. (A two-year old grandchild as example)

3:38 Krystal outlines the rules now, as of January 2020. If you inherit an IRA and are not a spouse, the entirety of the retirement plan must be paid out within ten years (and associated income tax)

5:00 Merrell discusses the SECURE Act in context of leaving wealth to grandchildren…

5:52 Exceptions to the ten year rule include: a surviving spouse; and person that fits the SECURE Act’s definition of  disabled and chronically ill persons; a beneficiary that is fewer than ten years younger than the planholder; and a minor child – not grandchild – until the age of majority

7:30 Krystal talks about revisiting client goals and trust provisions with CPAs and financial advisors

8:30 Merrell compares beneficiary possibilities – either as a trust or as a human, and the respective tax rates for each; she explains how the trust may need to have accumulation language so as not to force distributions and give the trustee some discretion

10:52 Common trusts (aka pot trusts, multiple beneficiary trusts) vs. Separate trusts; spreading the IRA tax hit

14:43 Explaining to the client how the 2020 SECURE Act laws are different than when we did their initial planning, and opening up the possibility of letting other assets appreciate

16:00 Merrell compares the relative risk of setting up a structure that requires the trustee to distribute wealth that will harm the beneficiary vs. taking the tax hit under the new law

17:28 Takeaways for estate planning clients as well as their advisors; revisiting your plan with your estate planning attorney to make sure it still makes sense and if an advisor, reaching out to make sure the client has the option to make changes

Resources

Other provisions of the SECURE Act 

If you like charts, National Association of Planners’ summary points of SECURE Act

 

In this episode of Tax Boss, we discuss titling and homestead, tenancy in common, and how state law can change the outcome of your estate plan if you’re not paying attention!

Resources

Florida Statute 732.7025 to waive spousal homestead rights

Timestamps

1:17 What happens when you have jointly owned property, and you don’t want the co-owner to inherit it? Florida’s homestead laws

2:36 Colorado homestead laws and value of total estate (Family Allowance and Exempt Property Allowance)

4:00 Options in handling a jointly held homestead

6:30 Differences between tenancy in common, tenancy by the entirety (TBE), and joint tenancy with rights of survivorship (JTROS)

9:15 In JROTS properties, either party can sever the JROTS and bring it to Tenants in Common; both members in Tenants by the Entirety would have to agree

10:30 Approaching personal estate planning assets in four quadrants: 1. Joint tenancy by entirety or rights of survivorship; 2. Anything that has a beneficiary designation form; 3. Anything owned by them individually that would be a probate asset; and 4. Trust asset (if they have a trust.)

13:15 Does your attorney understand Florida Statute 732.7025 or will they create an invalid deed?

In this episode of Tax Boss we discuss portability and estate planning, transfer taxes between married couples, prenups and generation-skipping transfer tax.

Resources

IRS form 706 (Revised November 2018)

Timestamps

1:43 Portability and transfer taxes between married couples (11.2 million dollars exemption currently, 22.4 together)

2:43 “I love you” Wills

3:50 how portability works and filing an estate tax return form 706

5:12 capturing the portable amount before Congress changes their mind

6:20 what about getting re-married? How would the IRS handle the prenup?

8:07 the generation skipping transfer tax is not portable