This May, the United States Senate passed the 2021 Securing of a Strong Retirement (SECURE) Act. While a similar piece of legislation was passed in 2019, the current one has many revisions, some of which could affect the estate planning process for adults throughout the country. Here’s a brief overview about this act and the modifications that it entails.

What Are the Major Changes?

One of the most significant changes brought on is a rise in the required minimum distribution age for retirement accounts. While it used to be 72, this age will rise gradually, reaching age 75 in 10 years. This means that people can wait longer to start withdrawing money from their retirement accounts. Since you may have to withdraw some funds completely within 10 years, many retirees want to save their withdrawals so that they have reliable income through age 85. It also allows account holders who experience a hardship, such as a loss of a partner, to make early withdrawals from their retirement account.

Another major modification is the establishment of automatic enrollment for 401(k) and 403(b) plans. Essentially, employees automatically sign up for these employer-sponsored plans when they are eligible, allowing them to start saving for retirement as soon as possible. While employees can opt out, those you want to participate don't have to take the initiative to set anything up. This is expected to cause a significant increase in the amount of Americans who have retirement plans.

How Does It Affect Estate Plans? 

With the new minimum distribution age allowing you to wait longer to withdraw from the account, you may need to update your estate planning timeline. For example, a higher minimum distribution age means there’s a greater chance you will pass away before withdrawing all the funds. In this case, your beneficiaries will receive them. If you’re worried that your beneficiaries may spend the money too quickly, or forget that it is taxable, you can modify the estate plan by leaving the retirement accounts to a trust. These legal entities allow you to set terms for the distribution of the assets, including the rate at which a beneficiary receives their inheritance. That way, you can ensure they receive funds incrementally, over a certain period of time, or only after reaching a certain age.

If this new legislative change has prompted you to review your estate planning documents, contact Lee, Livingston, Lee, Nichols & Barron in Dothan, AL. These attorneys have been helping clients make clear plans for their future for over 50 years. From wills and trusts to designating power of attorney, they can help you create a reliable and detailed legacy with their legal skills. Learn more about their practice areas by visiting the website. Call (334) 792-4156 to schedule for a free consultation.