Acronyms can make you feel like you’re totally “in the know”: like you’re speaking a secret language.
Or they can simply confuse the heck out of you.
Today we’re taking a brief look at SLATs and when it makes sense to have one.
What is a SLAT, you ask?
Read on and you too shall be “in the know.”
A Brief Explanation of SLATS
When it comes to estate planning, addressing the fluctuating federal estate tax exemptions and finding ways to reduce estate and gift taxes, and protecting a assets, is always of major concern to both clients and estate lawyers. It can also be quite challenging to do properly. Luckily, the law provides a number of tools that can be used in the right circumstances to help with this.
A SLAT is a flexible estate planning tool that can help married couples plan for these issues as well as other important asset protection issues.
Short for “spousal lifetime access trust,” a SLAT is essentially an irrevocable trust. It allows one spouse (the trust maker or “grantor”) to make a gift of property or money to the other spouse (the beneficiary of the trust) but to do so in a way that fully maximizes the grantor’s estate tax exemption while avoiding gift and estate taxes.
Basically, the grantor spouse creates the trust (i.e., the SLAT) for the benefit of his/her spouse. The grantor spouse then gifts property into the SLAT to fund the trust.
Because the grantor’s spouse is a beneficiary of the trust, the beneficiary spouse is entitled to distributions from the SLAT during his/her lifetime in accordance with the trust’s provisions.
At the death of the beneficiary spouse, the trustee distributes the trust property to the remainder beneficiaries named in the trust (often the grantor spouse’s children or grandchildren).
When Does it Make Sense to Have One?
As always, whether or not a SLAT makes sense for you depends on the particular facts of your individual situation. So you will need to consult with your estate and probate lawyer to find out whether a SLAT makes sense for you or not.
Generally speaking, however, a properly drafted SLAT can be of assistance in reducing your estate taxes. When properly created as an irrevocable completed gift trust, the property that is held in the SLAT (in other words, the property that constitutes the “completed gift”) is removed from both the grantor’s estate and the beneficiary’s estate for purposes of calculating estate taxes. This means that a SLAT can provide tax benefits.
If protection from creditors is an issue of importance to you, then a SLAT may also make sense for you. When created with the proper provisions and distributions, a SLAT can protect your assets from your creditors, your spouse’s creditors, and even creditors of your children (i.e., the beneficiaries of the trust).
There is far more to know about SLATs, so be sure to speak with an experienced estate and probate attorney.
Protecting Your Family is Just a Phone Call Away.
Don’t leave planning for your future and that of your loved ones to chance. All it takes is one phone call to the Law Offices of Samantha J. Fitzgerald to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well. When you work with the estate planning attorneys at the Law Offices of Samantha J. Fitzgerald, you get more than just an estate plan: you get peace of mind. Call us at 954-580-3690 or email us at: [email protected] today.