The SECURE Act and the SECURE Act 2.0 have drastically changed how to plan for your IRAs, 401(k)s, and most other retirement accounts. The law now only permits your surviving spouse, a disabled individual, or minor (while they remain a minor) to stretch the Required Minimum Distributions (RMDs) over their life-expectancy. Anyone else must withdraw the entire amount out of the account at the end of 10 years. In most cases, this means the entire value of the inherited IRA is subjected to income tax within those 10 years.

The 10 year rule can drastically increase income taxes owed by your beneficiaries. Not to mention that those same beneficiaries then have immediate access to the entire amounts.

The SECURE Act, however, does make using a Trust as the beneficiary of your retirement account far easier than before. Additionally, a properly drafted trust can both enable a surviving spouse to stretch the IRA over his or her life expectancy and thus delay when the 10 year payout begins for other beneficiaries. Trusts can also provide financial and tax oversight for younger beneficiaries who may not understand the consequences of withdrawing money from an IRA.

While you may not ultimately use a Trust for your estate planning, it is a tool worth considering. This is especially true if your estate will owe estate taxes or if you have minor children (or if you want to prevent your 20 year old from blowing his or her inheritance immediately).