et_chris, Author at Wealth.com

How to Get Estate Planning Documents Notarized

So you’ve created, or updated, your estate planning documents. Congratulations! You’re at the final stretch but there’s one more important step you may need to take: Your documents need to be signed and notarized.

Getting your documents notarized serves a few purposes but the most important one is that without getting notarized, they may not be considered legally valid. That could open your estate up to potential probate proceedings or other court challenges.

We recommend following this process:

Print your documents, or request them to be shipped to you.
Take them to be signed in front of a notary (additional witnesses may be needed).
Scan your notarized documents and upload them into your wealth.com Vault for security and accessibility.

Below we’ll detail more about the process, our recommendations and answers to common questions.

What does it mean to get estate planning documents notarized?

Getting a document notarized is when a notary public certifies the authenticity of signatures on a document. Typically, the process involves:

Identity verification. The notary verifies that the person signing is who they claim to be. They typically ask for identification in the form of a driver’s license or passport.
Witnessing the signature. A notary also needs to witness first-hand the person signing the documents willingly and not under coercion. Some states may require additional witnesses.
Notarial seal and signature. After the notary confirms the above, they include their signature and their official or stamp confirming that the document is now legally valid and credible.

Why is a notary needed?

The primary reason for getting documents notarized is for your protection. First, to ensure that documents aren’t fraudulently signed in your name. For example, somebody signing a will in your name that you did not actually sign—like something out of a movie plot.

Second, to ensure that the documents are recognized by the legal system if, and when, they need to be executed. The last thing you want to happen with your estate plan is for there to be unnecessary legal action because the validity of the documents you signed is questioned. By getting documents notarized, when they need to be executed there is confirmation that you have willingly signed them and they can be legally executed because you followed your state’s regulations for getting them notarized.

How can I get my documents notarized?

Requirements for how to get documents notarized vary by state. Each state has its own laws and regulations governing how notarization works. Differences between states may include identification requirements you can use or if you need additional witnesses as well as training requirements for notaries themselves.

You can usually find a notary at a local UPS or FedEx location. Banks also often have notaries on staff, although you may need to be a customer to use them. You can also search online for local notaries near your home. The benefit of going to a UPS or FedEx location is that you can print your documents there (if you don’t have a printer at home), get them notarized on site and then scan the signed documents and have them emailed to you so you can upload them to your secure Vault.

When you print your wealth.com documents, details for getting them notarized in your state will be included.

Are online notary services also available?

Online notary services are legal to use in some states but you should use caution if you choose to use one. That’s because while they can legally operate in some states, there still may be legal requirements that could conflict or create confusion with the use of an online notary.

For example, New Jersey allows remote ink-signed notarization but doesn’t recognize remote online notarization—the difference being the need for a wet signature. However, that ability to get it remotely can easily cause confusion.

Furthermore, some online notary services may not accurately follow state-specific instructions if they operate in multiple states, opening you up to potential issues in the future.

Legislation in a number of states is likely to continue to be updated, with the hope that remote online notarization becomes a simpler process. We are actively monitoring legislation across the country and will notify you—via instructions when it’s time to sign your documents—if remote online notarization is allowed in your state.

Until then, we do recommend an in-person notary as the best way to ensure that you minimize any potential legal issues if, and when, your documents are executed in the future.

Can I get my documents notarized in another state?

It’s recommended that you follow your state regulations and also discuss with your notary. Technically, a notary can legally notarize documents from any state as long as the notarial act occurs in the state in which they were commissioned because notaries are typically only verifying the signer’s identity and not the document itself.

However, best practice would be to confirm with the notary that they don’t believe this would be an issue. We also recommend extreme caution in this instance that the document is being notarized according to the instructions of the state they were produced in.

What if someone named in my estate plan is also a notary?

It’s not usually recommended that any interested party notarize or witness any estate planning documents.

Certain states will strike the nomination as executor or gift to a beneficiary if a witness is the individual named as either. Even without a specific statutory prohibition in a given state, it opens the door for all kinds of litigation arguments around undue influence and capacity in execution

You Created Your Estate Planning Documents, Now What?

Host Thomas Kopelman is joined by Dave Haughton, Senior Corporate Counsel at wealth.com, who’s stepping in for Anne Rhodes as ongoing co-host temporarily, to discuss what happens after someone creates their estate planning documents. Dave details the three key steps to know, especially for advisors guiding their clients, including the critical piece of needing physical documents and getting them notarized—and why online notarization may not be the best solution.

Subscribe and listen on your favorite podcast platform, or watch the video below.

For any questions, email us at [email protected].

SLATs, Marital Trust Conversations, and “Extraordinary Dividends” with Chris Nason “

Anne and Thomas are joined again by Chris Nason, partner at McDermott, Will and Emery LLP, to discuss the intracacies of how trusts operate, focusing on SLATs an Marital Trusts. Chris dives deep into SLATs, how they work, the benefits of having one and when having one may make sense.

They also debunk a conversation that has been taking social media by storm about a certain trust structure that can help you avoid all taxes, and discuss why it’s unlikely to work despite it going viral.

Subscribe and listen on your favorite podcast platform, or watch the video below.

For any questions, email us at [email protected].

SECURE Act Update: Inheritance Impacts & Case Studies

This is the second part in a series about the SECURE Act and how it may affect estate plans

Last week we shared that the IRS had issued their final regulations to many provisions within 2019’s SECURE Act. Many of these directly impact those that intend to leave retirement accounts to their family as well as those that are set to inherit them—in some cases, those that already have inherited retirement accounts.

In this article, we dive a little deeper into potential scenarios of how these regulations could affect those inheriting 401(k)s or IRAs.

First, what was the old way?

Prior to 2020, under the old rules anyone that inherited a retirement account could take withdrawals over their life expectancy. Many viewed that as much more straightforward, created less urgency (if you expected to live more than 10 years) and typically provided more tax deferral opportunities (again, you could spread it out longer than 10 years).

Anytime a new tax rule is introduced, it’s bound to cause some confusion about who’s affected, who’s not and what happens in certain edge cases. But these new regulations create a lot more potential branches of who’s affected—and how—that is likely to create queastions and impact how financial planners advise their clients on their estate and tax plans.

Why was the stretch-rule changed?

As for why the 10-year rule was introduced by the SECURE Act, there are a few reasons, namely:

1. To increase tax revenue.

By decreasing withdrawals to 10-years (or less) means the government accelerates the tax revenue from those accounts.

2. Limiting retirement accounts as inheritance tools.

The stretch-strategy was often used by high-net-worth individuals in order to pass their wealth to their heirs while minimizing tax liability. The 10-year-rule puts limitations on retirement accounts as wealth transfer vehicles in the hopes of them being used for retirement savings as they were intended.

There are more retirement account-related changes as a result of the enactment of the SECURE Act, but, for now, we’re focusing on the impact of the 10-year-rule and the required minimum distributions (RMDs).

Here are some scenarios on how these updated regulations would impact them.

Scenario 1: Adult child inherits his father’s IRA who passed at 75

When Bill’s father passed away at the age of 75 in 2024, Bill inherited his father’s IRA. Given his father’s age, he had already begun taking RMDs, as required by the IRS rules. Under the SECURE Act, Bill is subject to the 10-year rule, meaning he must fully distribute the IRA account he inherited within 10 years of his father’s death. Additionally, in accordance with the recently issued IRS final regulations, he must also continue taking RMDs his father started withdrawing, with the amount based on his life expectancy.

That said, Bill has some strategic considerations and flexibility, depending on several factors, including his income, tax bracket and financial needs.

Option 1: Spread out withdrawals

While he needs to continue annual RMDs, he could increase his withdrawals to evenly spread out distributions across 10 years—assuming the RMDs are lower than this amount would need to be. This could help him avoid being pushed into a higher tax bracket due to withdrawing large lump sums.

Option 2: Delay withdrawals

If Bill expects his income to decrease before the 10-year window closes, he could delay taking larger distributions until later in the window. This would allow him to potentially reduce his overall tax burden.

Option 3: Immediate withdrawals

A common saying in financial planning is “don’t let the tax tail wag the dog.” If Bill has immediate financial needs, he could withdraw larger amounts sooner. This could have high potential tax implications but as long as Bill is aware, that may not be his biggest concern.

Scenario 2: Husband inherits his wife’s 401(k) who passed before 59.5

Ryan’s wife Emma passed unexpectedly at 55 and he was named sole beneficiary on her 401(K). Because Emma hadn’t reached the age of 59.5, when she would be able to start withdrawing from her 401(k) without penalty, and because she didn’t reach the age of requirement for RMDs—73—Ryan has a couple of options.

Option 1: Keep it as an inherited 401(k)

Ryan could choose to leave Emma’s 401(k) in the inherited account. This would allow him to access the funds without the 10% early withdrawal penalty, which is significant because Ryan is also under 59.5 years of age.

While this option would give Ryan immediate access to the funds, should he need it, he would need to start taking RMDs once Emma would have reached her required beginning date. It is important to consider that keeping the account in an inherited IRA (rather than rolling it to his own IRA) may mean the account is more susceptible to creditor claims.

Option 2: Roll over to his own IRA

Ryan could decide to roll over the inherited 401(k) into his own IRA. The benefit of doing so would allow him to delay taking RMDs until he reaches the age of 73. However, he would be subject to the 10% early withdrawal penalty until he reaches 59.5.

If he doesn’t foresee himself needing the funds until he reaches that age, this strategy could be beneficial for long-term growth since the funds would remain invested and grow tax-deferred for a longer period of time.

Strategic considerations

Ryan might also consider his overall tax situation. Taking RMDs from the inherited IRA will increase his taxable income each year, potentially pushing him into a higher tax bracket. By contrast, rolling the IRA into his own account defers this tax impact until he begins taking RMDs at age 73.

Additionally, if Ryan has other sources of income and doesn’t need the inherited IRA funds for living expenses, he might prefer the rollover option. This would give him more control over his retirement planning and potentially reduce his tax burden in the short term.

Scenario 3: Minor inherits a parent’s IRA

Sarah passed away at 68 and named her minor son, Jake, who is 15-years old, as the sole beneficiary of her IRA. Given her age, Sarah was not yet required to withdraw RMDs. Since Jake is a minor, he qualifies for an exception to the 10-year rule. This exception allows him to stretch out RMDs—calculated based on his own life expectancy—until he reaches the age of 21. During that time, he (or his guardian) will be required to withdraw annual RMDs to avoid penalties. Given his age, however, those RMDs are likely to be lower compared to an adult beneficiary.

When Jake turns 21, the stretch period ends, and he will be subject to the 10-year rule.

Scenario 4: Parent dies, adult child inherits, then adult child dies and adult grandchild inherits

When Mark passed away at the age of 75, his daughter, Lisa, inherited his IRA. Since Mark had already started taking RMDs, Lisa will be subject to RMDs and the 10-year rule.

Similar to Ryan in Scenario 2, her strategic considerations include spreading out withdrawals across the 10 years, delaying larger withdrawals or taking larger withdrawals sooner. What she decides to do depends on her financial situation, including her financial needs and tax strategy.

Unfortunately, Lisa passed away only a few years after Mark, leaving the IRA to her now adult child, Jane.

Jane is now subject to the 10-year rule but it would not restart. Meaning, she would have to continue the 10-year period that her mother, Lisa, already started. So if Jane passed during year 3 of her 10-year window, Lisa would be continuing that timeline and would need to fully distribute the IRA 7 years after she inherited it.

Scenario 5: Post-73 death, leaving IRA to a trust

Nancy passed away at 75 and left her IRA to a trust. How this scenario is handled depends on the type of trust, and the SECURE Act’s rules would guide how the IRA is distributed to the trust beneficiaries. The rules provide guidance on whether the trust is a “see-through” trust or not.

To be considered a “see-through” trust it must meet certain criteria, just as the term suggests—the beneficiaries must be identifiable. If the trust document doesn’t identify the beneficiaries, it could face more restrictive distribution rules.

Another piece of criteria is that the trust document must be delivered to the IRA custodian by October 31 of the year following Nancy’s death. This is so that the custodian can verify the trust terms and determine the appropriate distribution rules. Finally, it also depends on the trust type, whether it’s irrevocable or revocable.

For this scenario, let’s assume Nancy’s trust is considered “see-through” and is a revocable trust that becomes irrevocable at her death. The trust also names her two children, Alice and James, as equal beneficiaries. Neither Alice nor James are a minor or disabled to meet a SECURE Act exception permitting them to “stretch” distributions.

Both Alice and James are subject to the 10-year rule, and, therefore, the trust is likely subject to the same distribution rules.

Moving forward with inherited retirement accounts

These are just a few possible scenarios that are affected by the SECURE Act, so it’s important that financial advisors take the time to understand the nuances and intricacies for their clients. It also presents potential opportunities for advisors to help their clients with potential estate and tax strategies.

At wealth.com, we’re committed to staying on top of legislation that could impact estate planning strategies and will always ensure our advisors and clients are informed.

This post is one in a series of posts that will detail more aspects of the SECURE Act and the Treasury regulations. To stay up-to-date, follow wealth.com on LinkedIn or X/Twitter to get the latest on how these new regulations may impact your clients, their retirement accounts and their estate plans.

Utilizing the Doubled TCJA Exemption before the 2025 Sunset with Chris Nason

In the latest episode of The Practical Planner, Anne Rhodes and Thomas Kopelman sit down with Chris Nason, a partner at McDermott Will & Emery LLP and a Trust and Estate Planning teacher at Stanford University. Chris provides a deep dive into The Tax Cut and Jobs Act of 2017, sharing insights on how advisors can craft effective estate planning and tax strategies before its benefits sunset at the end of 2025.

Don’t miss out on this valuable discussion to help you stay ahead in advising your clients.

Subscribe and listen on your favorite podcast platform, or watch the video below.

What’s New at wealth.com – July 2024

We can’t believe we’re more than halfway through 2024! It’s been a busy summer so far, and we’re excited to share the latest updates with you.

Introducing the Task Center to Elevate Oversight of Your Client’s Estate Planning Journey

You asked and we listened. We’re pleased to announce the Task Center to enhance collaboration and streamline estate planning oversight for advisors. Accessed through the Advisor Dashboard, advisors are able to add items—or tasks—for each of their clients to better track the progress of what’s done and what’s still outstanding.

Advisors can add tasks for each client to create a clear roadmap of what needs to be done, including tasks they need to complete themselves, as well as what their client needs to complete. For example, a task named “Onboarding Meeting” can be added to remind them to set a time with their client to walk through how to use wealth.com. They can also add a task to “Save documents to Vault” to remind their clients to upload their signed documents and other files that are essential for estate settlement, such as partnership certificates and stock agreements. Once complete, check the task off your list and it will be moved to the “Completed” row below.

Document Update: Name Contingent & Ultimate Beneficiaries

Members are now able to name an alternate (or “contingent”) beneficiary to receive a share of their residuary estate or a specific gift in the event that the primary beneficiary they have named predeceases them, or if the beneficiary is a charity and no longer exists or has lost its charitable status from the IRS. Members also now have the option to name ultimate beneficiaries, which is more of a “catch-all” beneficiary who can take any assets (not just a specific share or gift) if that asset cannot be distributed.

How do contingent and ultimate beneficiaries work? In a typical plan, a contingent beneficiary might be a grandchild who was born to a specific child and who can only receive up to the share that the child could have received, whereas an ultimate beneficiary might be a charity who could receive any number of your assets in the event that none of your descendants survive (also known as a “disaster” clause).

These updates are available to members in their Joint Revocable Trust, Individual Revocable Trust, and Last Will & Testament document creation workflows.

In Case You Missed It: Family Office Suite™ & New Legal Hire

You’ve likely heard that we have released our Family Office Suite™ earlier this month, a collection of new and existing features to streamline estate management for highly complex estates.

If you haven’t, or would like to learn more, you can join our upcoming webinar on August 6 at 1pm PT | 4pm ET where we’ll be diving deep into the features.

We also announced our latest hire, David Haughton, who joined as our senior corporate counsel. Haughton comes from Commonwealth Financial Network where he was responsible for providing estate, trust, charitable, education, business and social security planning support to the firm’s affiliated advisors. Prior to that, he was in private practice as an attorney.

He has a passion for estate planning and will be instrumental in the development of our products, ensuring the high quality that our advisors expect.

We take pride in collaborating closely with our advisor partners and their clients to offer tools for creating, visualizing, and managing estate plans effectively over time. Your feedback is invaluable to us, so please don’t hesitate to share your thoughts by emailing us at [email protected].

SECURE Act Update: The Treasury Department Clarifies How 2019 Law Affects Inherited Retirement Accounts

This is the first part in a series about the SECURE Act and how it may affect estate plans

On July 18, 2024, the IRS issued the long awaited final regulations to many provisions of 2019’s SECURE Act. Perhaps most anticipated were those regulations relating to the distribution requirement for beneficiaries of individual retirement accounts (IRAs) and 401(k)s. We detail the key takeaways below, with the historical context on the SECURE Act.

The Setting Every Community Up for Retirement Enhancement Act—or SECURE Act—was enacted in 2019. It made numerous changes to retirement and tax-advantaged accounts. However, some of those changes created some confusion among financial and tax professionals. Chief among those was a new 10-year withdrawal rule for retirement accounts inherited by non-spouses (10-Year Rule). This changed the previous rule allowing those who inherited a retirement account to spread out withdrawals over their own lifetime.

Typically, when a law as extensive and as complex as the SECURE Act is passed, a government agency such as the Treasury Department, must interpret and supplement the law with more detailed regulations before the law is fully enforced. For the past four years, advisors have operated in the unknown as far as the rules related to distributions for clients with inherited retirement accounts.

In 2022, the Treasury Department issued proposed regulations. One of the rules that created the most controversy and confusion stated that most beneficiaries subject to the 10-Year Rule would also be required to make required minimum distributions (RMDs) during years one to nine, with the rest of the account’s balance needing to be depleted by the end of year 10. This came as a shock to many financial advisors, wealth managers and tax professionals who felt that the plain text of the legislation would not require RMDs. The IRS considered this feedback and formally waived any potential RMDs for years 2021 through 2024 until final regulations would be issued.

These final regulations are here now and have become legally effective. In those 260 pages of rules, they confirm the position that the IRS took in the proposed regulations: in most circumstances, RMDs are required for non-spousal beneficiaries that have inherited retirement accounts. So, what now?

This series of articles will dive into some more of the intricacies and potential effects of these regulation in the future, but here are some initial takeaways advisors and their clients should be aware of:

1. Who is affected: The 10-Year Rule and continuing RMDs apply to most non-spousal beneficiaries

If a retirement account is inherited by a spouse, these rules do not apply. However, they will apply to children, grandchildren or anyone else who inherits an IRA or 401(k).

2. What retirement accounts are affected: Continuing RMDs apply only if the deceased person was already required to take RMDs from the account

The current time period for starting to withdraw RMDs from retirement accounts is April 1st following the year the owner reaches age 73.

If your client inherited an account from someone who died before reaching that date, your client is not required to start taking RMDs from the account as soon as they have inherited the account. Instead, you can help your client plan their withdrawals to optimize for income tax results. However, the entire account must be withdrawn by the tenth year of the year following the death of the account owner as required by the 10-Year Rule.

3. When are taxpayers affected: Those who inherited an account won’t be penalized for missing withdrawals in 2020-2024, but the 10-year window won’t be extended

Per the SECURE 2.0 Act, the typical penalty for missing a withdrawal is 25% of the amount that should have been taken out. Anyone that inherited a retirement account subject to the new regulations but failed to take distributions while waiting for the IRS’ final call will not be subject to that penalty. But those hoping the IRS would then give them more time to make distributions will likely be disappointed.

It is not anticipated that any more extensions are forthcoming, and, therefore, starting in 2025, individuals should be prepared to start taking annual withdrawals with the amount being determined on their life expectancy, which could help ease the pain of making a major payout due to missing four years of withdrawals.

4. Who is not affected: Some inheritors are not impacted by these regulations

The Secure Act sets forth classes of beneficiaries who are not subject to the 10 Year Rule. Those beneficiaries are those who are:

The spouse of the decedent
Less than 10 years younger than the decedent
Disabled
Chronically ill
Minor child of the decedent

Such beneficiaries have special rules affording them to stretch distributions over their life expectancy and not subject to the 10 Year Rule (a minor can stretch until age 21 and then are subject to the 10 Year Rule). Therefore, it is critical to assess the type of beneficiary inheriting a retirement account before guiding them on the distribution rules.

Additionally, the final regulations only apply to those beneficiaries of decedent retirement account owners who died after December 31, 2019.

5. Just because a taxpayer is only required to take a certain amount doesn’t mean they shouldn’t be taking more

In many circumstances, inherited IRA owners should have been imposing RMDs on themselves rather than waiting to see if the IRS makes them before the whole account needs to emptied out in year 10. This is because, for tax efficiency purposes, it is often better to spread out taxable income over the 10 years rather than wait for a very large taxable distribution in year 10. Therefore, inheritors should be observant of their tax situation when determining whether they should withdraw the minimum from their inherited retirement account or take a more aggressive approach.

Where Estate Planning Fits Into Life Planning

Justin Castelli, Founder of RLS Wealth, joins hosts Anne Rhodes and Thomas Kopelman to talk about how his approach to financial planning has shifted to focus on life planning by placing a focus on his clients’ life goals and values at the center rather than focusing on the numbers first. By helping clients figure out what their authentic life looks like and how to achieve it, he believes it brings more clarity to the estate planning process. Check out this episode to hear how he helps clients figure out what’s most important in their lives and how that helps them plan for what happens when they pass.

For any questions, email us at [email protected].

Subscribe and listen on your favorite podcast platform, or watch the video below.

Archer Investment Management Increased Estate Planning Document Creation & Creates Quick Wins for Clients

Archer Investment Management was founded in 2008 with a holistic approach to financial planning believing advisors should provide their clients help and guidance with all aspects of their finances, including estate planning. They have $270 million assets under management (AUM), working with over 200 households, mostly mid-career, high-income earners in tech with new or young families.

They needed a better digital solution to increase estate planning completion

Although the RIA had been founded in Austin, TX, they have since gone digital-first and work with clients across the country. While they had developed relationships with local, Austin-based estate attorneys, doing so in every state they had clients wasn’t scalable. But the digital estate planning solution they had originally brought on wasn’t working.

“Documents weren’t getting done,” Emily Rassam, Partner and Senior Financial Planner at Archer, said. “It’s almost worse if somebody went through the entire process of creating documents and they were unsigned. So we would have a lot of unsigned documents sitting in our portal.”

Wealth.com integrated easily into their holistic approach

“The big difference with wealth.com is for us to be able to be more involved with the invitation process and that we also developed some workflows, processes and checklists around nudging our clients through the process of creating their documents, “ Rassam said.

They were impressed with more than just wealth.com’s platform, it was also the people behind the software. “Our onboarding experience felt very white glove,” Rassam said. “They showed me how to create my own documents, so I can see what the client experience is like.”

“The other thing is wealth.com’s FAQs are really good,” she added. “Between Anne’s [Anne Rhodes, Chief Legal Officer at wealth.com] videos and then everything inside the platform as you moved through each screen, I feel like I didn’t need as much help.”

Wealth.com has become a relationship builder and is a big accomplishment for clients

“We helped exactly 35 clients start their estate planning documents with wealth.com in the 35 weeks we’ve been offering the service,” Rassam shared. “That’s 35 families who likely wouldn’t have created documents otherwise because finding an attorney and paying thousands of dollars is stressful.”

Her favorite quote from a client so far is: “What we just did together in 20 minutes, took me 20 years to sit down and do”. Besides securing their clients’ legacies and making it easy to achieve something they know is important, it’s added a lot of value to the RIA and the service they can provide to clients.

“When you think about the cost of wealth.com and the cost of us actually having to do the work versus getting this crossed off somebody’s list, it’s a huge relationship builder,” she said. “It gives our clients a lot of peace of mind. And this is exactly what we can help them do. It’s something we can very easily point to and say, ‘we accomplished this big thing.’”

“It’s a nice lever to mark down as being accomplished,” she added. “I’m not giving them legal advice in any way but we’re getting it done.”

“I love this complimentary value-add we get to provide our clients and their families,” she added.

Everything You Need to Know About Marital Trusts

Curious when it makes sense to have a Marital Trust? Hosts Anne Rhodes, Chief Legal Officer at wealth.com and Thomas Kopelman, Head of Community at wealth.com and Co-founder of AllStreet Wealth discuss the three main reasons to set one up, including:

Concerns over how your spouse may use your assets
Tax planning purposes, including the the generation-skipping transfer (GST) tax
Asset protection

They dig into each reason and get into specifics of situations when having a Marital Trust can be beneficial.

Subscribe and listen on your favorite podcast platform, or watch the video below.

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