The Law Office of Christopher W. Dumm — The Secure Act

Happy new year. I'm Christopher Dumm, estate planning attorney, and I'm here to tell you about an important update. On December 20th of last year, 2019, President Trump signed into law the SECURE Act. This act became effective January 1st of 2020 and there are three basic changes that this legislation has made to retirement accounts. The first change is the age of required distributions has increased from 70 and a half to 72 so you do not have to take any required distribution from your retirement account until you reach the age of 72. The second change is that there is no age restriction anymore for contributions to a qualified retirement plan. The third change is the biggest change that might impact your estate plan. The general rule is now that a beneficiary of a retirement account must withdraw everything from that account that they inherit within 10 years after the original account owner's death.

For those of you who are advisors, this means that conduit trusts and stretch out IRA trusts. In fact, the entire stretch out IRA strategy is for most purposes, dead. We're going to have to find new strategies in order to accomplish those types of goals. Those new strategies could be accumulation trusts, it can be life insurance trusts, or they could be some type of charitable trust arrangement. Now there are some exceptions to this general rule and that would involve spouses. Children who are under the age of 18 in the disabled and chronically ill have some exceptions that allow them to maintain the attached to for all of these accounts that they inherit. So why is this change important in an estate planning context? Well, we always have to balance tax efficiency with main estate planning goals on a client and now it's become even more critical.

So the solution to this is to meet with your estate planning attorney and your other trusted advisors. We will be discussing this in more detail at our Life Program meetings this next month. This is a perfect example of why we have the Life Program in our law firm because there are three changes that can happen to your state plan. There are changes in your personal life, both financial as well as personal changes in the family. There are changes in your attorney's experience were things that I learned I can bring to my clients and upgrade their current estate plan. And then this third change, which is their changes in the law, which is precisely what the secure act has done to most of my clients' estate plans. Thank you for your attention and have a great year.