As with every year, there are certain law changes that are proposed and may or may not be enacted. Two very important and potentially very impactful issues have come to light in the last several months that may affect all estate plans in general. For clients of Family Estate Planning Law Group, please be sure to read on regarding our recommendations for reviewing and updating your estate plans as part of your client care program membership in light of these potential law changes.
The first potential change is the SECURE Act. The SECURE Act, or Setting Every Community Up for Retirement Enhancement Act of 2019, contains 29 provisions with the goal of helping our country overcome the retirement crisis by seeking to prevent Americans from outliving their assets by increasing access to tax-advantaged accounts. This act was passed by the House of Representatives earlier this year and will make sweeping changes to qualified retirement assets and procedures. To learn more about the act click here.
As mentioned, the SECURE Act would likely affect your estate plan. The law proposes to limit the number of years that an inherited IRA can be held by a non-spouse beneficiary following the IRA owner’s death. The law presently allows what’s called a “stretch-out inherited IRA” following the death of an IRA owner over the lifetime of a non-spousal designated beneficiary. The new law proposes a 10‑year limit and requires an IRA to be liquidated within 10 years following the year of an IRA owner’s death. This law is now pending before the Senate and would dramatically change how our clients plan for inherited IRAs. This will most likely require changes to existing revocable living trusts and inherited IRA trusts to meet the new law. Since we do not know what the final law is, we cannot go into specifics. However, we will be keeping you updated as this law, if enacted, is proposed to take effect as of January 1, 2020. Please be aware that it may be best to review estate plans following the final enactment of this law so that the estate plan can be updated in conjunction with any other estate planning updates requested, as well as in regard to the specific law change.
Another potential change is that MassHealth made a significant change in how it will value Life Estates in determining eligibility for Long-Term-Care (nursing home) Benefits. It will now rely on a new table to determine the value of life estates, which increases significantly the value assigned by MassHealth to life estates. The effects of this potential change are still to be determined and we await further clarification of this change, but this could also dramatically affect some Massachusetts Medicaid planning.
For clients of Family Estate Planning Law Group, as you know, part of our ongoing client care program focuses on making sure that estate plans are updated consistent with changes in the law. We know that many of you typically schedule appointments as the end of the year approaches to get a head start on your new year’s resolutions. Due to these pending law changes, unless you have major changes in your personal instructions, family, health or assets, we kindly request clients that are looking to review their estate plans to please schedule a review with our office in the first half of 2020 when we will have more clarity on what the effects of these new laws are. We appreciate you being proactive about keeping your plans up-to-date and for being flexible as we wait for the final updates on the SECURE Act and Mass Medicaid, and while we love seeing you, we know that you have more important and fun things to do than meet with your estate planning firm twice in a short period of time so that your plan is in compliance with new law changes. If you have any questions, we, of course, invite you to contact us.
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To learn more about estate planning and our ongoing client care program, visit our website and schedule your complimentary consultation today! Together, we plan for life® and ensure your assets and your family are protected through all of life’s changes and law updates.