Understanding the SECURE Act's Impact on Estate Planning and the Role of Lawyers in a Tech-Driven World
- Ashley Alexandrino
- 6 days ago
- 3 min read
Estate planning has changed significantly in recent years, especially with the introduction of the SECURE Act. This law affects how retirement accounts are inherited and has important consequences for estate planning strategies. At the same time, artificial intelligence (AI) is becoming more common in legal services, including estate planning. Despite the rise of AI tools, lawyers remain essential for navigating complex estate issues. This post explains how the SECURE Act changes estate planning and why legal expertise is still necessary in a world increasingly influenced by technology.
How the SECURE Act Changed Estate Planning
The SECURE Act, passed in late 2019, introduced new rules that affect retirement accounts such as IRAs and 401(k)s. These changes impact how beneficiaries inherit these accounts and how estate plans should be structured.
Key Changes to Retirement Account Inheritance
Before the SECURE Act, beneficiaries of inherited retirement accounts could stretch distributions over their lifetime, allowing tax-deferred growth for many years. The SECURE Act eliminated this "stretch IRA" option for most non-spouse beneficiaries. Now, most beneficiaries must withdraw the entire account balance within 10 years of the original owner's death.
This change means:
Faster distribution of retirement funds to heirs
Potentially higher tax bills in a shorter time frame
Reduced ability to grow assets tax-deferred over decades
Who Is Affected?
The 10-year rule applies to most non-spouse beneficiaries, including adult children, grandchildren, and other heirs. Spouses still have more flexible options, such as rolling the account into their own IRA.
Implications for Estate Planning
The SECURE Act requires a fresh look at estate plans involving retirement accounts. Some important considerations include:
Tax planning: Accelerated distributions may push beneficiaries into higher tax brackets. Strategies to manage this tax impact are critical.
Trusts and beneficiary designations: Estate planners must review how trusts are named as beneficiaries and whether they comply with the new rules.
Alternative assets: Some may consider shifting wealth into assets not subject to the 10-year rule, such as life insurance or taxable investment accounts.
Practical Example
Imagine a parent leaves a $1 million IRA to their adult child. Under the old rules, the child could stretch withdrawals over 30 years, minimizing annual taxes. Now, the child must withdraw the entire amount within 10 years, possibly paying a large tax bill in a short period. This change could reduce the overall inheritance value.
Why AI Is Overrated in Estate Planning
AI tools promise to simplify estate planning by automating document creation and offering basic advice. While these tools can be helpful for simple wills or trusts, they fall short in many important ways.
Limitations of AI in Estate Planning
Lack of personalized advice: AI cannot fully understand unique family dynamics, financial situations, or goals.
Complex legal issues: Estate planning often involves complicated tax laws, trust structures, and state-specific rules that require expert interpretation.
Risk of errors: Automated tools may miss critical details or fail to update documents as laws change.
No substitute for judgment: AI cannot replace the nuanced judgment and ethical considerations a lawyer provides.
Why Lawyers Remain Essential
Estate planning lawyers bring experience and insight that technology cannot match. They can:
Tailor plans to individual needs and family situations
Navigate complex tax and legal rules
Coordinate estate plans with other financial strategies
Provide ongoing advice as laws and circumstances change
Example of AI Limitations
A client with blended family members, special needs dependents, and multiple properties needs a customized estate plan. AI tools may generate generic documents that do not address these complexities, leading to unintended consequences or disputes.
How Lawyers and Technology Can Work Together
Technology can support lawyers by handling routine tasks, improving efficiency, and providing clients with easy access to documents. However, the lawyer’s role in interpreting the law, advising clients, and making strategic decisions remains critical.
Benefits of Combining AI and Legal Expertise
Faster document preparation without sacrificing quality
More time for lawyers to focus on complex issues
Better client communication through digital tools
Enhanced accuracy with AI-assisted review
What Estate Planning Should Look Like Today
Given the SECURE Act and the rise of AI, a modern estate plan should:
Be reviewed regularly to reflect law changes and life events
Include tax strategies to manage accelerated retirement account distributions
Use technology to streamline processes but rely on lawyers for advice
Address all assets and family circumstances comprehensively
Final Thoughts
The SECURE Act has reshaped how retirement accounts fit into estate plans, creating new challenges and opportunities. While AI tools offer convenience, they cannot replace the expertise and judgment of estate planning lawyers. Combining technology with professional legal advice ensures that estate plans are both efficient and effective. If you have retirement accounts or complex family situations, working with a qualified lawyer is the best way to protect your legacy and provide for your heirs.
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