E46: Season 5 Episode 1 – Protecting Your Assets During COVID-19

Tom Dunlap chats with Rhonda Miller, partner of Dunlap, Bennett & Ludwig, about how to protect your assets during a global pandemic and the presidential election. 

The Secure Act  

Rhonda first discusses how the Secure Act, passed in January, is an important law that affects your assets. When the world shut down in March, the Secure Act was pushed out of many people’s minds, but Rhonda encourages us to think about it, as the act has a huge impact on retirement funds.  

Prior to this law, if your children inherit your retirement funds, they can allow that money to grow in their own lifetime and withdraw it by 72. However, under the Secure Act, your children now only have 10 years before they must withdraw the funds. This change diminishes the chance of the fund growing, as well as creates other problems. 

Adjusting to The Secure Act 

Rhonda goes on to explain that if your children inherit your retirement funds as minors, the ten-year withdrawal period begins when the oldest turns 18. Most clients are unhappy with this, as they don’t want their children receiving that money when they’re still young, as it would bump them up into a new tax bracket. The money then goes more to the IRS than the children, which defeats the purpose of a retirement fund.    

To avoid this, Rhonda encourages people to assess their documents and have them redrafted. She discusses how placing your retirement assets into a charitable remainder trust can break the ten-year rule. Listen to the episode to learn more.  

Redrafting Documents in response to COVID  

Rhonda mentions how COVID has sparked a need for change in legal documents in other areas. For example, redrafting your documents to include more information on telehealth would help avoid any issues if a loved one were to fall sick or injured in this time, whether due to COVID or otherwise.  

Restrictions in air travel has also created new challenges. If you’re your parent’s medical agent and cannot get on a plane to take care of their documents, you may want to adjust documents to name a local agent that can take care of things on your behalf.  

How the Election Affects the Estate Tax 

Lastly, Rhonda discusses the current situation with the estate tax and gift exemption. With the estate tax and gift exemption, an individual can give 11.5 million over his or her lifetime. However, this may change with the election. Rhonda suggests that if you currently have a large estate, make plans to gift or pass down money. She iterates to get it done before the end of the year because the law may change in 2021. 

Overall, Rhonda believes it is imperative to revisit estate planning at this time. She advises you to include telemedicine, as well as generate a plan to comply with the secure act so that the documents still stand valid and correct. 

Resources:

Tom Dunlap: LinkedIn 

Rhonda Miller: LinkedIn

Blackletter: Website 

Dunlap Bennett & Ludwig: Website