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Ali Katz

SUPER Important re the SECURE Act - Resources for You + Your Clients

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Hello lawyers! You've probably heard by now that a new law went into affect on Jan. 1, 2020, impacting retirement accounts, called the SECURE Act. You may or may not know the details, what to do about it, how much you need to know, and what you need to share with your clients about it.

 

I've put together two scripts for our Personal Family Lawyer and Family Business Lawyer members to use to educate their communities about the SECURE Act, and the potential impacts and opportunities. Those scripts are available for your review (and use) here

 

As you'll see, there are two sets of considerations, and this should simplify your analysis significantly, if you think about it this way:

 

1. How to handle the retirement accounts during life; and

2. What to do with remaining benefits at death.

 

The decision about how to handle accounts during life is made by the client and their financial advisor (or, you, if you are also their financial advisor), based on income tax considerations now and at retirement, as well as available funds now and income needs at retirement. Ideally, you will be working with your client and their financial advisor to consider options, but unless you are the financial advisor, you do not need to do the mathematical calculations, as that would be up to the financial advisor to do.

 

Your job is to primarily support with options related to what happens to the remaining benefits at death. This does require you to understand the amount of assets that are anticipated to remain in the retirement account at the time of death (based on the lifetime planning considerations), and to explore with the clients how they want those assets to pass to their heirs. Here's the questions you'll want answered in that exploration:

 

1. Who should receive the remaining benefits? Based on who the client wants to receive the assets, you can then identify how long of a period the assets can be distributed over, based on the SECURE Act. If it's only ten years ... then you would ask the client the next question
 

2. If the beneficiary receives all of the assets outright over ten years, and the retirement assets are then not protected from creditors, lawsuits or future divorce, is that okay with the client? If not, you can explore having the required distributions pass to an "accumulation" trust for the benefit of the beneficiaries, so the Trustee can hold the assets over a longer time period. This could cause more adverse income tax consequences due to compressed trust tax rates, and therefore could merit exploration of using a charitable remainder trust, or perhaps converting the account to a ROTH IRA during life, and paying the tax during the lifetime of the client, rather than after their death, at potentially higher trust tax rates.

 

If you are a Member-in-Training (meaning that you've enrolled in one of our Bootcamps, but are not yet a Personal Family Lawyer or Family Business Lawyer), conduct this analysis and read these scripts from the perspective of gaining your own understanding of the basics of the SECURE Act, and how it will impact your own retirement accounts and that of your two practice clients. If you have parents or other senior family members who have significant retirement accounts, you can also look at how the SECURE Act will apply to them. Please ask lots of questions here and on coaching calls to clarify your understanding.

 

If you are a Personal Family Lawyer or Family Business Lawyer, make sure that you not only understand the impact of the SECURE Act on yourself, and family, but that you are prepared to educate your prospect, client and referral source community (using the scripts I've written, and the articles that will come out this week as well), and then discuss the impact with your clients when they come in for a FWPS or Estate Plan Review/Checkup.

 

If you are a Wealth Counsel member, I understand that they have offered a training on the SECURE Act.  If you are not a Wealth Counsel member or want more training than what Wealth Counsel has provided, you may want to enroll in one or more of these trainings by Bob Keebler. I am working on getting a 25% discount code on these trainings, so indicate in the comments if you'd like us to tag you when I have that discount code available. Bob also has a package of PPT presentations that are very detailed (and I imagine fairly complex) if you want to do more in depth training for your community around the SECURE Act. This probably only makes sense if you provide financial advisory services, in your office. Otherwise, you can let the financial advisors you work with help their clients understand the income tax consequences and choices of what to do with their retirement account during life, and you can remain focused on what they want to happen with whatever is left at death.

 

Remember, your job is to counsel your clients, and they are counting on you to know about this new law, and for help understanding how it will impact them. Please let us know how else we can help you to be a better counselor to your clients.


Alexis

 

 

 

 

 

 

 

 

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Thanks for these awesome scripts, @Alexis Katz!  I was just telling my dad (who is one of my top advisors) yesterday that although the SECURE Act is definitely a bummer for those who are beneficiaries of their parents IRAs (like myself for example!) I do see this as an opportunity for a new way to serve clients by getting curious about what the family wants/needs with respect to distribution of retirement accounts after SECURE and the different options available.  I also see it as a great opportunity to create relationships with financial planners by offering education on this new area of law.

 

Today on the Estate Planning Call, Nicole Newman also mentioned she will be creating a new presentation on the SECURE Act implications and that she will share that with us when it is ready. I did already watch Robert Keebler's first webinar on this topic (Tax & Estate Planning for IRAs After the SECURE Act) and I found it very useful. I would like to get a discount on his newest presentation, What You Need to Know About IRAs Payable to Trusts Now Following the SECURE Act, if that becomes available.

 

Thanks!

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I have watched Wealth Counsel's "New Year, New Paradgm: What You Need to Know About the SECURE Act" by Henna Shah and Yvonne Olivere and it is very comprehensive.  I would also be interested in the Keebler Code.

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Hello all, here's the code to take 25% off on any of the trainings, other than live events, from UltimateEstatePlanner.com before Jan. 31: NLB25
Here's the link again to the SECURE Act trainings from Bob Keebler: 
https://ultimateestateplanner.com/program-category/recurring-programs/the-secure-act-series/

 

They DO also have a set of 4 PPT presentations that are editable and client facing for $149 here. These seem to me to be way overkill for lawyers, and prob more suited for financial advisors. Nicole and I will be working on a more formal client facing presentation, but for now I recommend using the scripts I wrote to generate the business, and leave the complex decisions around what to do with the plan during life to the financial advisors (unless you are one) and you focus on what they want to do w the remaining asset after death.

 

Also, please note that it's perfectly valid for folks to want to keep things simple, distribute outright to their kids, let the kids pay the income tax and have the assets be at risk. And, just you using this change to get them into your office for a FWPS or Plan Review, to review their choices and planning decisions, or even do planning for the first time is great.

 

Alexis

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I'm following up on this thread and seeing if the SECURE PPT might be ready for clients.  Thanks so much!!  

 

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Hi @Amy Hsiao,

 

Internally, Yaasha presented on our 2020.02.11 Basic EPBC Coaching Call a  Secure Act training that is available for review. The recording, agenda and presentation slides are located here in our coaching call library. In the meantime we will be keeping this thread updated as work between Alexis and Nicole unfold around their presentation details. 

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Back office drafting just sent us a form regarding secure act changes and mentioned that NLBM members should check with NLBM on guidance. 

 

Do you wish to include only conduit provisions for all trusts? yes or no

Do you will to include conduit trust provisions for a trust created for an individual who is not more than ten years younger than a trustor? yes or no

Do you wish to include provisions to cause the beneficiaries of accumulation trusts created under the instrument to qualify as designated beneficiaries of a retirement plan? yes or no

3. Include the following standard for discretionary withdrawals of principal and income from a

qualified retirement plan for any marital trust created under the trust instrument:

a.The Trustee may withdraw additional amounts as the Trustee deems advisable for an

ascertainable standard.

b.The Trustee may withdraw additional amounts as an Independent Trustee may determine

advisable for any purpose. If there is no Independent Trustee, the Trustee may withdraw additional

amounts for an ascertainable standard.

c. The Trustee may withdraw additional amounts as an Independent Trustee may determine

advisable for any purpose.

 

4. Include the following standard for discretionary withdrawals and distributions of principal and

income from a qualified retirement plan for trusts created under the trust instrument that will be

treated as accumulation trusts:

a)The Trustee may withdraw and distribute additional amounts as the Trustee deems

advisable for an ascertainable standard.

b)The Trustee may withdraw and distribute additional amounts as an Independent Trustee

may determine advisable for any purpose. If there is no Independent Trustee, the Trustee may withdraw

and distribute additional amounts for an ascertainable standard.

c)The Trustee may withdraw and distribute additional amounts as an Independent Trustee

may determine advisable for any purpose.

 

5, For any subtrust designated as a beneficiary of a qualified retirement plan, for purposes of retirement

distributions, selecting this option will create language that removes a non-individual (such as a charity or

an estate) from being a beneficiary of such subtrust or from being an appointee under any power of

appointment granted in the subtrust. This is to ensure that the subtrust qualifies as a designated

beneficiary under Internal Revenue Code Section 401(a)(9). Particularly in the case of a special needs

trust, you should be very intentional when using this option if the residuary beneficiary of such trust is a

charity, for instance. In addition, if you have selected GSTT planning within your trust, this accumulation

provision will cause any GSTT non-exempt trust named as a beneficiary of a retirement plan to risk a

GSTT taxable termination or distribution.

After reading this warning, do you wish to include provisions to cause the beneficiaries of

accumulation trusts created under this instrument to qualify as designated beneficiaries of a

retirement plan?*

Yes No

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Thank you for bringing here to the forum Pam; we are happy to review and provide guidance. I would like to run this by our team, so bare with us as we find time to schedule and review so we can provide you with the most clear guidance.

 

Also, I wanted to post a link to David's post where he also surfaced this question with links to both the ForeTrust and Wealthdocx PDFs. 

 

https://www.newlawbusinessmodelcommunityforum.com/forums/topic/3479-secure-act-language-questionnaire-from-back-office-drafting/

 

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Hi @Pamela Maass, just wanted to let you know, David and some others have requested that Nicole take a look at the language on today's Advanced Estate Planning Call so we have this on the agenda. 

 

We look forward to providing you support. 

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As I shared on David's post, Nicole provided us with further resources on the subject:

 

Natalie Choate:

  • From Naepc.org: http://www.naepc.org/events/newsletter/1/2020 - Natalie B. Choate is a lawyer with Nutter McClennen & Fish LLP in Boston, and is the author of the estate planner’s “bible” on estate and distribution planning for our clients’ IRAs and other retirement plans, Life and Death Planning for Retirement Benefits. The 8th edition (2019) can be ordered at www.ataxplan.com, where a downloadable supplement updating the book for the SECURE Act changes will be posted free as soon as feasible. Or subscribe right now to the electronic edition at www.retirementbenefitsplanning.us.
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