Spousal Lifetime Access Trusts (SLATs)

The hardest part of advanced estate planning typically isn’t technical, it’s psychological.

Gifting assets to an irrevocable trust means giving up access and control, which is extremely difficult to do even when it’s the right move.

That’s why Spousal Lifetime Access Trusts (SLATs) have gained so much traction. 

That psychological barrier is easier to cross when your spouse (and indirectly, you) still have access to the assets during their lifetime.

Here’s the gist:

A SLAT allows one spouse to make a large, tax-free gift to an irrevocable trust for the benefit of the other spouse (and future generations).

The assets are removed from the donor’s taxable estate, yet the beneficiary spouse can still access them if needed, giving the couple indirect access while keeping the estate tax benefits intact.

Distributions from the trust are typically considered the bucket of last resort, to be tapped only after other sources within one's estate are exhausted, but it’s still there if needed.

Business and real estate interests can be ideal assets to fund an irrevocable trust. We recently helped a client gift a portion of their family’s real estate interests into a SLAT.

Because the assets were illiquid and the donor spouse didn’t have a controlling stake, they were able to apply lack of marketability and minority interest discounts, reducing the amount of their lifetime exemption used.

Estate planning is never just about minimizing taxes. It’s about balancing control, access, family, and values. SLATs are one of the few tools that can help strike that balance. 

Preserve Private Wealth is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specic securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to rst consult witha qualied nancial adviser and/or tax professional before implementing any strategy discussed herein.