Estate Planning Strategies to Preserve IRA’s with John Ross, Ep #124

Now that the SECURE Act is the law, we need to rethink our estate planning strategies since it has effectively killed the stretch IRA. With the death of the stretch IRA, many people are scrambling to figure out what the best way is to leave their heirs their IRA’s. Fortunately, estate attorney and host of the Big Picture Retirement, John Ross, is here to discuss what alternatives there are now for people who were going to use the stretch IRA. If the SECURE Act has left you scratching your head then you’ll want to listen to this interview with John Ross to hear some estate planning options.

John Ross is here to discuss what alternatives there are now for people who were going to use the stretch IRA. Share on X

Outline of This Episode

  • [1:22] How has the loss of the stretch IRA changed estate planning?
  • [4:06] An accumulation trust may be the key
  • [6:44] A new opportunity for state income tax planning
  • [9:22] How to turn a 10-year stretch into a 20-year stretch
  • [16:32] A case study
  • [18:44] You may want to consider a charitable remainder trust

How has the loss of the stretch IRA changed estate planning?

The recent changes to the stretch IRA that were made by the SECURE Act have flipped estate planning on its head. With the stretch IRA people named their spouse as primary beneficiaries and their kids were named secondary beneficiaries to an IRA. The IRA could then go into a conduit trust which could flow the RMD’s directly to the beneficiary. These RMD’s were small amounts of money based on the beneficiary’s life expectancy. The bulk of the IRA was preserved in the trust and was protected from creditors. Due to the SECURE Act, the conduit trust will no longer be the standard of care. 

Now is the time to review your #EstatePlanning. Share on X

An accumulation trust may be an alternative to the conduit trust

Since the conduit trust will no longer be the standard of care, now what can people do? The SECURE Act has cut the amount of time inheritors can take to withdraw funds from the IRA to 10 years. But you never know what may be happening during that 10-year window. The inheritor may get divorced, be sued, or have creditor problems. If they directly receive the IRA then all of the money will be available to those creditors in that 10-year timeframe. Instead of having the funds flow directly to the individual, they could sit in an accumulation trust. 

How to turn a 10-year stretch into a 20-year stretch

In the past, the standard has always been to name the spouse as the primary beneficiary, but with the death of the stretch IRA we need to rethink our legacy planning opportunities. It may make more sense now to only leave the spouse half of the IRA and the kids can receive the other half. Listen in to find out how this strategy could turn a 10-year stretch into a 20-year stretch for the kids as beneficiaries. 

Listen to this interview with John Ross from the Big Picture Retirement Podcast to hear how you can optimize your legacy #TaxPlanning, and learn about the charitable remainder trust.  Share on X

Take the opportunity to review your estate planning strategies

The change in law may seem inconvenient if you had planned to use the stretch IRA. But we can all take the change as an opportunity to review and update our estate planning. Now is the time to review your estate planning.

Of course, you don’t know what the right choice will be for you until you begin planning your own estate. Listen to this interview to hear how you can optimize your legacy tax planning, and learn about the charitable remainder trust. 

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