The Setting Every Community Up for Retirement Enhancement Act of 2019, also known as the SECURE Act, took effect on January, 2020. While it provides several opportunities to boost retirement savings, the new law will present planning challenges for many people who inherit IRAs, 401(k)s and other retirement accounts.

Under the SECURE Act, many beneficiaries of inherited IRAs must withdraw all of the assets in the IRA within 10 years. Previously, non-spousal beneficiaries could choose to take only required minimum distributions over their life expectancy, rather than taking all the money within a specified time frame. (Required minimum distributions are calculated using factors such as the beneficiary's age, life expectancy, and account balance.) This tax-advantaged opportunity disappears with the Secure Act, effectively ending the "stretch" option for many beneficiaries.

The bottom line is this: The SECURE Act's "Drain-in-10" rule can result in a large tax bill for an IRA beneficiary, especially if that person is in their 40s or 50s, which are typically the peak earning years. The same is true for beneficiaries of inherited 401(k)s.

It is important to note that there are exceptions to the SECURE Act's rules governing inherited retirement accounts. Surviving spouses still have the option to withdraw only the required minimum over their life expectancy. Assets left to a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent are also excluded. (A child would become subject to the new 10-year rule once he or she reaches majority age.) Also, beneficiaries taking required minimum distributions from inherited accounts before the SECURE Act went into effect will not be required to follow the 10-year rule.

If you have recently inherited an IRA, or are concerned about the tax implications for a loved one to whom you plan to bequeath an IRA, we can show you ways to minimize the potential tax burden.

What Happens When the Role of
Caregiver Comes to an End?

According to a recent AARP Public Policy Institute Report, approximately 40 million adults in the United States are now caring for another adult. The role of caregiver is often so demanding that many caregivers effectively put their own lives on hold to meet the needs of the person under their care. While much has been written about how to cope with the demands of caregiving, the challenges of "life after caregiving" are rarely addressed. A recent article by AARP explores the emotions and experiences of several former caregivers after the person under their care passed away.

"Some (caregivers) find they're not quite sure what to do with themselves because their reason for getting up in the morning, their all-consuming job, has now ended," said Ruth Drew, director of information and support services for the Alzheimer's Association. "Some people tell me that for the first six months to a year they're just finding their bearings, and it takes a while to feel like themselves again."

What follows are some of the insights shared by former caregivers in the AARP article.

Don't let isolation overwhelm you

While this may seem obvious, it is absolutely essential to stay busy to fight loneliness and depression. You must find the "thing" that gives you purpose. For one former caregiver, that thing was traveling. For another, Jeannie Moloo, it was writing. Moloo described her life as caregiver of her ailing husband while simultaneously raising three children this way:

"It was just run from one thing to the next to the next to the next. When you live that way, you don't have to process a lot of emotions because you're just running around, putting out fires."

Moloo is writing a book about her husband's illness, its impact on her family, and what she learned.

"We had promised each other—and this is going to make me cry—that we would take this experience… and make something out of it to help others," she said.

You'll experience unexpected emotions

Former caregivers are often surprised by the range of emotions they experience after the death of their loved one. According to C. Grace Whiting, CEO and president of the National Alliance for Caregiving, sadness is often accompanied by frustration and anger. In addition, the end of the responsibilities inherent in caregiving often lead to a feeling of relief, which is quickly followed by guilt for feeling that way. All of these conflicting emotions are common and entirely normal.

Put off the big things

When the role of caregiver comes to a close, it can be a mistake to rush into other major life changes, such as selling the house. Ruth Drew advises people to move slowly because grief and exhaustion can cloud one's judgement.

According to Jeannie Moloo, when her husband died she just wanted to run away from everything. What was her mindset at the time? "Sell our house, uproot the children and move to another area altogether, thinking I'd get us away from the suffering and loss with a fresh start," said Moloo. "I'm glad I didn't. Keeping with our family routines, in the comfort of our home where my husband lived with us, has provided solace for my family these past few years."

It's okay to move on

A sense of isolation, conflicting emotions, the urge to rush into major life changes… in addition to grief over losing a loved one, former caregivers experience all of these emotions and more. Eventually, however, you will be ready to move on. Give yourself permission to do so. Former caregivers must always remember to care for themselves.

If you’d like to read the entire AARP article, go to
https://www.aarp.org/caregiving/life-balance/info-2018/after-caregiving-ends.html

Does a Revocable Living Trust
Protect Your Assets?

Revocable living trusts are powerful estate planning tools capable of providing a number of important benefits, such as streamlining the distribution of assets to heirs, avoiding the expense and frustration of probate, and keeping information about one’s finances and family private.

However, if your goal is to protect your assets against creditors and other threats, a revocable living trust may not be the best solution. Why? A revocable living trust gives the grantor (the "maker" of the trust) access to and control over the trust’s assets during his or her lifetime.

Additionally, the grantor is considered the owner of the assets inside the trust. Therefore, these assets can still be vulnerable to the grantor's creditors.

When you transfer your assets into an irrevocable trust, on the other hand, you have relinquished control over them. The irrevocable trust is considered to be the owner of the assets. Thus, you cannot be asked or forced to give up assets in the trust if you are sued. (Of course, transferring assets into the trust after you have been sued will not protect you.) Irrevocable trust assets are also shielded from recovery of long-term care expenses.

Irrevocable trusts are not for everyone.
We can help you determine if you would benefit from such a trust.