Senior Choies

How to Leave Your Legacy - Part 2

Dear Readers,

BY DONALD PETERSON

In my last article, I covered some initial, important items to consider regarding how to leave your legacy. This week’s article is a continuation of the items to consider, to help achieve your goals of leaving a legacy under recent changes in the law.

A new law, called the SECURE Act, made significant changes that could have an important impact on many non-spouse beneficiaries and affects existing estate plans, as well as those to be created in the future. Specifically, the Setting Every Community Up for Retirement Enhancement Act of 2019, more commonly known as the SECURE Act (the Act), was signed into law on December 20, 2019.

The Act makes it easier for more people to save for retirement and makes several significant changes regarding how and when individuals can save for retirement using qualified retirement plans and individual retirement accounts (IRAs). However, the Act also dramatically limits the times during which retirement plan benefits must be distributed to the beneficiaries.

The Act started in the House of Representatives, where it passed quickly in the summer of 2019, but later stalled in the Senate. In a surprise move, however, the Act was attached to the critical spending bill in December 2019 that needed to be passed to avoid a government shutdown. Thus, the spending bill, with the attached Act, was quickly approved by the Senate on December 19, 2019, and signed into law by President Trump the very next day.

The changes in the Act affect who persons may select as beneficiaries of the person’s retirement plans, and also affect how estate plans must be drafted, particularly those involving trusts receiving retirement plan benefits.

In my prior articles, I advised about the various types of trusts, which are a popular and useful estate planning tool to cover a wide variety of needs. When people want to ensure that their beneficiaries receive an inheritance over an extended period of time and are protected from potentially squandering their inheritance, trusts can be utilized to avoid these contingencies. Potential beneficiaries who are young, spendthrifts, disabled, or subject to substance abuse can be protected with a properly drafted trust.

Many estates now include retirement plans, as a result of which, trusts have been designated as a beneficiary of the retirement plans to receive the benefits and to avoid problems where individual beneficiaries receive their share of retirement plans too quickly.

Under the Act, where trusts are designated as retirement plan beneficiaries, specific, custom-tailored drafting is required, particularly with respect to compliance with the new Act concerning the time periods for withdrawals and distributions of retirement plan benefits. In fact, the Act allows the creation of a new type of multi-beneficiary trust. Thus, the Act has brought about numerous changes for both existing and future estate plans. It is recommended that those with retirement plans of significant value have their estate plans and beneficiary designations reviewed and appropriately revised, to comply with the Act.

It is always a good idea to consult with an experienced estate plan attorney regarding creating or updating your estate plan, including with respect to trusts to be revised or created under the SECURE Act, to accomplish your goals and avoid unintended consequences. This will help ensure that your legacy will be established, according to your desires.

As a courtesy, there is no charge for my initial consultation with clients, which can be done over the phone or by video consultation. I have served seniors and their families for over 43 years regarding their estate planning needs.

My contact information is as follows: Donald Glenn Peterson, Esq. Don Peterson Law Firm 1720 S. Bellaire St., Suite 530 Denver, CO 80222 Phone: (303) 758-0999 Fax: (303) 758-1091 E-Mail: donald@petersonlaw.co www.donpetersonlawfirm.com