Should I Get a Spousal Lifetime Access Trust?

Spousal Lifetime Access Trusts (SLATs) are popular among residents of Florida. If you’re wondering estate planning advantages are available to married couples, SLATs represent one potential option. But is this strategy really for you? How does a SLAT work, and how might it help you achieve your estate planning goals? These are questions you might want to ask an experienced estate planning attorney in Stuart.

How Does a Spousal Lifetime Access Trust Work? 

A SLAT is a type of irrevocable trust. This means it will be very difficult to alter or terminate the trust once you establish it. Although this lack of flexibility presents certain disadvantages, irrevocable trusts generally offer better asset protection features as compared to revocable trusts.

SLATs also involve a long-established estate planning strategy called “gifting.” As the name implies, this involves reducing tax liabilities by giving assets to others. A particularly common gifting strategy involves giving assets to your spouse.

Gifts are usually tax-exempt in Florida, and they are also tax-exempt on a federal level. The federal estate tax and gift exemption is over $13 million as of this writing, and it increases each year based on inflation. As a result, the average family does not have to worry about paying any taxes on gifts throughout their lifetime.

Why Choose a SLAT Instead of an Outright Gift? 

So what is the difference between a SLAT and an outright gift? When you give a gift to your spouse via a SLAT, you transfer it into a trust first. Your spouse can then access the trust and receive your gift to cover their own living expenses. Since you are almost certainly living with your spouse and sharing the cost of these living costs, the gift indirectly benefits you. This can be an excellent way to cover retirement costs while simultaneously reducing your taxable estate.

A trust also offers more safeguards compared to an outright gift. If you give your spouse millions of dollars, you have no control over how they spend the funds. They may spend the funds irresponsibly, especially after you pass away or if you become incapacitated. The same level of financial irresponsibility may be exhibited by your other named beneficiaries, such as children and grandchildren. Trusts can have various rules and conditions, thereby distributing funds gradually and preventing the waste of your fortune.

After your spouse passes away, the remaining trust assets will be inherited by your other beneficiaries (usually children and grandchildren).

Can an Estate Planning Attorney in Palm Beach County or Martin County Help Me? 

If you’re wondering whether you should establish a spousal lifetime access trust, consider exploring this subject further with an estate planning attorney at Kitroser Lewis & Mighdoll. While SLATs may be beneficial for many couples, they may not be suitable in all situations. A consultation with a lawyer gives you an opportunity to discuss your unique circumstances, and this may lead to more targeted legal advice. To continue this conversation, schedule a consultation with Kitroser Lewis & Mighdoll today.

Source: 

forbes.com/sites/martinshenkman/2023/03/12/back-end-slats–a-slat-ilit-dapt-or-spat-by-another-name/