New Year, New Laws

With the ringing in of every new year, there is always a new set of laws that go into effect. This year, two laws directly affect trustees and beneficiaries in the state of Illinois.

The Illinois Trust Code (ITC)

The Illinois Trust Code (ITC) has replaced the Illinois Trusts and Trustees Act with several notable changes, including:

Duty to Account and Inform

For trusts that become irrevocable after 2019, the trustee must notify each qualified beneficiary of the trust’s existence and whether the beneficiary may request trust accountings and a copy of the trust instrument. This notice must be given within certain prescribed time periods, such as 90 days after the trust becomes irrevocable. A trustee must also send an accounting to each current beneficiary at least annually, and to all beneficiaries after a trust terminates. Therefore, for those who have created a joint or reciprocal trust with their spouse in Illinois, now may be a good time to review your estate planning.

The SECURE Act

The second law that has taken effect is called the Setting Every Community Up for Retirement Enhancement Act (SECURE). SECURE has a significant impact on retirement accounts.

Changes to Required Minimum Distributions (RMDs)

SECURE increases the required beginning date (RBD) for required minimum distributions (RMDs) from your retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts.

Impact on Beneficiaries

The most significant change affects the beneficiaries of your retirement account. Under the old law, beneficiaries of inherited retirement accounts could take distributions over their life expectancy. However, under the SECURE Act, most designated beneficiaries are required to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death. A shorter distribution period may push beneficiaries into higher tax brackets, reducing the funds they receive.

Exceptions

There are a few exceptions to this mandatory ten-year withdrawal rule including

• Spouses
• Beneficiaries who are not more than ten years younger than the account owner
• The account owner’s children who have not reached the “age of majority,”
• Disabled individuals
• Chronically ill individuals.

A new year is a perfect time to schedule an appointment with your attorney to look over your estate planning goals and see how they may be affected by these new laws. Contact us at 312-344-3644 or Contact@jlonglaw.com to discuss your particular case.