Over the last few decades, estate planners, in Cincinnati and elsewhere, have grown very fond of IRAs. The retirement accounts allow people to name a beneficiary who gets the account automatically without the need for a will or trust, after the current account holder passes away.
It is a very simple way to pass wealth to the next generation that has many uses in estate planning.
IRAs make estate planning easier, in most cases.
With one type of IRA, known as a stretch IRA, the beneficiary of the account can even delay taking out required minimum distributions and save a lot on taxes.
However, that benefit is now coming under fire as Kiplinger reports in "Death of 'Stretch' IRAs Would Mean Loss of Flexibility for Beneficiaries."
Congress is considering doing away with the ability to stretch IRAs for non-spouse beneficiaries, if the accounts hold more than $450,000.
This proposal has passed in the Senate Finance Committee as it is expected to raise federal revenue by a substantial amount. If this passes and becomes law, estate plans will need to be revisited.
This idea is not yet currently law.
However, people who uses IRAs as an important part of their estate plans would be advised to keep an eye on this issue and to start thinking about alternatives for their estate plans.
It would not be a good idea to get caught off guard.
Should this pass, failure to adjust your estate plans could cost your heirs large sums of money.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Kiplinger (August, 2017) "Death of 'Stretch' IRAs Would Mean Loss of Flexibility for Beneficiaries."