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Idaho Estate Planning How The Secure Act May Affect Your Plan

By Lane V. Erickson, Idaho Estate Planning Attorney

Estate planning laws are always changing. These changes could involve specific state laws concerning the form and format of drafting an estate plan. Alternatively, these changes could involve federal law having to do with taxes, or other aspects of estate planning, such as the recently enacted SECURE Act. Whatever the changes are, it’s important that you have a knowledgeable and qualified estate planning lawyer or team that can help you keep your estate-planning updated with current law. 

Through our knowledge and experience, our team of premier Idaho estate planning lawyers are able to provide advice and counsel to each of our clients that are necessary and helping them keep their estate plan current whenever any laws change.  Our team consists of partners Randy Budge and Lane Erickson and attorneys Nate Palmer and Dave Bagley. Each of our estate planning lawyers has been around for some time. This alone is not enough to qualify us to be considered one of the premier estate planning and probate firms in Idaho. Rather, it is our experience and knowledge that gives us the ability to help our clients with their questions and concerns, including keeping up with changes in all state and federal laws that could affect your estate plan.

The purpose of this article is to talk about the recently enacted SECURE Act and how this new federal law could impact your current estate plan. The SECURE Act which is an acronym for the setting every community up for retirement enhancement act was signed into law by President Trump on December 20, 2019. The main purpose of this new law is to provide broader retirement options to many workers. However, at the very end of this statute, there are some changes to how an individual can transfer an individual retirement account, or IRA to their family members and other loved ones. 

Effect of the SECURE Act on Passing an IRA on to Loved Ones

Before the SECURE Act, an individual could name any person as a beneficiary to their IRA. The effect of doing this was that when the owner of the IRA passed away, the IRA would then be transferred to that beneficiary. The new beneficiary would have the option of taking distributions from that IRA based on their own age. As a result of this, if a parent passed away, and transferred an IRA to a child, that child could spread out distributions from the IRA over many decades during their lifetime which would reduce the amount of taxes that would be paid on those distributions. 

The SECURE Act changes all that. Under this new statute, the beneficiary who receives the IRA now only has 10 years in which to take the distributions from the IRA. As a result, the taxes that will have to be paid on those distributions will likely be much higher than they would previously have been. 

Because of this, we are now talking with our clients about who they have named as a beneficiary on their IRA, and the effect the SECURE Act will have on those individuals. The reason we do this is because many people use the beneficiary designations on their IRA as part of their basic estate plan. 

Exceptions to the Secure Act

The good news is that there are some exceptions to this 10-year full distribution rule as it applies to the SECURE Act. The first exception applies to a surviving spouse. In other words, the 10-year full distribution rule is not applicable to a spouse who is named as the beneficiary on their deceased spouse’s IRA. This gives the beneficiary spouse the flexibility to continue to receive distributions based on their own age allowing distributions to potentially be spread out over many decades. 

Additionally, there is an exception to a minor child who has not yet reached the age of majority. However, this does not apply to grandchildren. Further, once the minor child reaches the age of majority, which in most states is the age of 18, then they would be subject to the 10-year full distribution rule. 

And additional exception applies to any individual who is disabled. If the beneficiary recipient of an IRA is a disabled individual, then the 10-year full distribution rule does not apply. Again, the reason for this is that the individual who is disabled is likely already receiving some sort of benefits from the government. This exception allows this disabled individual to continue to receive those benefits without jeopardizing them through a larger distribution from an inherited IRA. 

Some additional minor exceptions exist concerning the SECURE Act. These would include a chronically ill individual. It would also include an individual who is less than 10 years younger than the original IRA owner. 

Accounts Not Affected by the Secure Act

In addition to the existence of some exceptions, there are also some accounts that are not affected by the SECURE Act. The big one would be a Roth IRA. The reason for this is that the Roth IRA is designed to make distributions tax free both to the owner and to any beneficiary who inherits it. As a result of this, a beneficiary who is named as the recipient of a Roth IRA does not have to take distributions under any required minimum distribution plan, including the 10-year full distribution plan that is applicable now through the SECURE Act. 

The SECURE Act is just one of the reasons that it’s important to have an attorney keeping up with applicable state and federal estate planning laws to help you. We do this for all of our estate planning clients, and we are confident that we can do this for you too! 

Enlist an Idaho Estate Planning Attorney to help You  

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.

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