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Time to Review Your Estate Plan

There are various times when it is a good idea to review your estate plan!

You should review your estate plan immediately after a major life event such as a change in your marital status, a birth, adoption, death, sudden diagnosis, or prolonged illness of a family member. You should also consider reviewing your estate plan if there is a substantial change in the value of your assets, you received a sizeable inheritance or gift, your income levels have changed, or you are retiring.

Changes in the tax code, which often occur on a yearly basis, are another reason you may want to do a quick review. For example, the most recent Setting Every Community Up for Retirement Enhancement (SECURE) Act effectively eliminated the “stretch IRA,” an estate-planning strategy that allowed an IRA to continue benefiting from tax-deferred growth. According to the IRS website, For defined contribution plan participants, or Individual Retirement Account (IRA) owners, who die after December 31, 2019 (with a delayed effective date for certain collectively bargained plans), the SECURE Act requires the entire balance of the participant’s account be distributed within ten years. There is an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than 10 years younger than the employee or IRA account owner.

Individuals who plan to leave IRA and retirement plan assets to heirs — and individuals who stand to inherit retirement assets — should understand the new rules and distribution options. Retirement account owners should review their beneficiary designations with their financial or tax professional and consider how the SECURE Act provisions may affect inheritances and taxes. Any strategies that include trusts as beneficiaries should be considered especially carefully.

Aside from the different changes that have been listed, it may be a good idea to review your estate plan every five years in case you simply may have changed your intentions. Doing so will not only give you peace of mind but will also alert you to any other changes that need to be addressed.

Written by: Kenneth Price, CFP®, CFA®, ChFC®, CLU®, AEP®