SECURE Act Means It’s Time for an Estate Plan Review

The most significant legislation affecting retirement was signed into law on Friday, Dec. 20, 2019. After stalling for months, Congress suddenly passed several bills, as attachments to budget appropriations, as reported by Advisor News’ article “SECURE Act, Signed by Trump, A Game-Changer For Retirement Plans.”

Here are some of the key points that retirees and those planning their retirements need to know:

Changes to Age Limits for IRA and 401(k) Accounts. The age for taking Required Minimum Distributions (RMDs) has increased from 70½ to 72 years. Adding a year and a half for investors to put away money for retirement gives a little more time to prepare for longer lifespans. The change recognizes the prior limits were arbitrary, and that Americans need to save more.

However, the SECURE Act also brought about the demise of the “stretch” IRA. Americans who inherit an IRA must now withdraw the money within 10 years of the account owner’s death, along with paying taxes. Surviving spouses and minor children are still exempt. The exempt heirs can still spend down inherited IRA accounts over their lifetime, which is an estate planning strategy known as the “stretch.” Distributions ordinarily need to be given directly to the beneficiary so that those proceeds are not creditor or divorce protected. An option to consider is a stand alone retirement account trust. This allows the distributions to be reinvested in a side account that will remain protected. After 10 years, even after paying all the income taxes, there may be more in the account than the original balance. Thus, it is critical to have an estate plan review to explore the best options to consider under this new law.

Small Business 401(k)s. The SECURE Act expands access to Multiple Employer Plans, known as MEPs, so that employers can pool resources and share the costs of retirement plans for employees. This will cut administration and management costs and ideally, will allow more small businesses to offer higher-quality plans available to their employees.

The law also enhances automatic enrollment and auto-escalation, letting companies automatically enroll employees into a retirement plan at a rate of 6%, instead of 3%. Employers can now raise employee contributions to a maximum of 15% of their annual pay, although workers can opt out of these plans at any time.

Annuities Options. The SECURE Act now allows 401(k) plans to offer annuities as a retirement plan option. Experts have mixed opinions on this. Annuities are a type of life insurance that convert retirement savings into lifetime income. However, fees are often high, and if the insurance company closes its doors, those lifetime income payments may vanish. Under the new law, employers also have what’s called a “safe harbor” from being sued, if annuity providers go out of business or stop making payments to annuity purchasers. Being freed from liability may make employers more likely to offer annuities, but that may put 401(k) investors at more risk, say consumer advocates.

529 Plans and Saving for Children. The new law expands 529 accounts to cover many more types of education, from registered apprenticeships, homeschooling, private elementary, secondary or religious schools. Up to $10,000 can be used for qualified student loan repayments, including for siblings.

Reference: Advisor News (December 23, 2019) “SECURE Act, Signed by Trump, A Game-Changer For Retirement Plans”


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What Does the Movie “Knives Out” Teach Us About Estate Planning?

One of the recent surprise hit movies has been the murder mystery Knives Out, with a star-studded cast that includes Jamie Lee Curtis, Daniel Craig and Chris Evans.

Forbes’s recent article “What The Movie ‘Knives Out’ Gets Right (And Wrong) About Estate Planning,” says that the crux of the story is a topic most Americans wouldn’t find exciting–the world of estate planning, unless the estate planning involves the wealthy. Spoiler Alert: there are spoilers below!

In the movie, the patriarch of a wealthy family, Harlan Thrombey (Christopher Plummer) is found dead. Just before his death, he changed his estate plan. The movie takes viewers through some twists and turns to see who might be responsible for his death. However, there are also some key scenes that address estate planning concepts, such as contesting a will, undue influence and the slayer statute. These are issues moviegoers might want to know about for their own estate plans.

One of the most dramatic scenes in the movie is the gathering of the family at their father’s home for the reading of the will. In a library, the attorney sits behind the patriarch’s desk and reads the document. The importance of this scene is highlighted, when Daniel Craig’s character explains that the will reading is really a performance of “a tax return by a community theater.”

However, the filmmakers have taken some liberties because the “reading of the will” doesn’t actually happen in real life. It’s a dramatic and pivotal scene in the movie, but don’t expect it when someone dies. Although the reading of the will is also more fiction than fact, there are some things are very real in the estate planning world.

When things don’t go well for the Thrombey children in their father’s estate plan, the family immediately thinks about contesting the will. This has become increasingly common because of an increased willingness by people to challenge estate plans. This is due in part to us living longer.  Frequently estate plans aren’t updated to address changes in the family. In cases where the testator has dementia or is otherwise incapacitated, there is also a chance of undue influence. The usual result of a contested will is some type of settlement.

Again, a common claim in a will challenge is for undue influence. In the movie, when Marta the caretaker becomes the sole beneficiary, this concept is bandied about by the Thrombeys when talking about a will contest. Undue influence is a legal concept that can be used to invalidate a will, trust, or legal instrument. It occurs when a vulnerable individual is persuaded to change his or her estate plan, and the persuasion and influence rise to the level where the victim is unable to freely exercise his or her independent will.

In the film when undue influence fails, the Thrombey family turns to the concept of the “slayer statute.” This law stipulates that a person can’t inherit, if they intentionally killed the deceased. While this concept makes for good filmmaking, it’s an actual premise in estate law.

The movie Knives Out gets a lot right about estate planning correct, such as will contests, undue influence and slayer statutes. So, enjoy the picture!

Reference: Forbes (December 18, 2019) “What The Movie ‘Knives Out’ Gets Right (And Wrong) About Estate Planning”


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Your Boarding Pass Is a Gold Mine for Identity Thieves

You might think your boarding pass is useless trash once you find your seat, but do not discard this piece of paper. Take it home and shred it. This advice might sound alarmist but read on. Your boarding pass is a gold mine for identity thieves.

Your boarding pass contains much more information than your name and seat number. At this point, you might have fished through your carry-on bag and found an old boarding pass. You might not detect much information on the paper, but that is because the data is encoded. Before you assume that encoded information is safe, you need to realize that a simple barcode scanner can unlock the encryption. You can buy a barcode scanner on Amazon for 20 dollars.

What a Con Artist Can Learn About You with a Barcode Scanner and Your Boarding Pass

The barcode on your boarding pass contains information like your name and details of your flight. The barcode also reveals your full airline account number. Some airline barcodes also contain your telephone number, email address, the reference code for your ticket and more.

A savvy scammer can take that information to harvest information from your social media accounts you might use to answer security questions to access your airline frequent flyer account. The hacker can steal your frequent flyer points or mess with your life, by canceling your future flights or changing your destinations.

Let’s say you are extremely careful about what you post on social media. The fraudster can get your password reset by calling the airlines and pretending to be you, sharing the personal information he gleaned from the barcode and whatever he found on social media.

The reference code is a six-digit code the airline assigns to you, so you can look up your reservation conveniently. This code is in the barcode information.

The scammer can input this code at the airline’s website, look up your reservation and find all of your travel information for the entire trips including other flights. He can also get the names and frequent flight account numbers of everyone who booked in the same reservation with you, like your spouse or children.

How to Protect Yourself from Boarding Pass Pirates

You have several options to make it harder for scammers to access the personal data the barcode on your boarding pass contains.

  • You could use a digital/mobile boarding pass, by having the airlines email the boarding pass to you. The risks of this option are you might lose your phone, the phone battery might be dead, or you might not get a signal when you are in the airport and need to have your digital boarding pass scanned. You could save the barcode on your phone or take a picture of the barcode, so you do not have to go online or connect to your cell phone provider’s network to access it on your phone.
  • If you prefer to use a paper boarding pass, guard it carefully. Do not leave it out in the open where someone could take a photo of it or scan it. Do not leave it on the plane. do not post photos on your boarding pass online. When you get home, shred that piece of paper.


HuffPost. “How Hackers Can Use Your Boarding Pass To Easily Steal Personal Information.” (accessed December 12, 2019)


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