More Tax Benefits for Florida Residents

Spousal Lifetime Access Trust UPDATE:

More Tax Benefits for Florida Residents

Florida is known for being a destination for retirees to seek out warmer weather and a relaxed lifestyle. Contrary to historical trends, Florida is beginning to see a significant influx of younger individuals, families and businesses making the move due to the state’s tax benefits and remote work options.

Recent changes to Florida’s uniform trust code make the Sunshine State an even more favorable place of residence from a tax and asset protection standpoint. Effective as of July 1, 2022, these changes further enhance the use of a spousal lifetime access trust, or SLAT, as an asset protection vehicle as discussed below.

How Does a SLAT Work?

A SLAT is an irrevocable trust established by one spouse (grantor spouse) typically for the benefit of their spouse (beneficiary spouse), used to shield assets from creditors and federal estate tax. The benefit of this type of trust is that the assets within the SLAT effectively grow tax-free as opposed to having the SLAT bear the income tax burden. This results in more wealth shifted to the beneficiaries of the SLAT.

How Will the New Florida Law Change the Benefits of a SLAT?

The new amendment will now allow the grantor spouse to be a beneficiary of the trust if the beneficiary spouse predeceases the grantor spouse. This means the grantor spouse will be able to access trust assets while keeping those assets outside the estate and likely protected from creditors of the grantor spouse.

The new legislation will only apply to SLATs that are entered into and funded after June 30, 2022 and enhances Florida’s position as both a tax and debtor-friendly jurisdiction.

Why Should I Act Now?

A SLAT can be a very tax efficient way to transfer wealth to the next generation. Florida-based clients are encouraged to take advantage of the increased exclusion before it sunsets on December 31, 2025 or Congress takes action to reduce the exclusion even sooner – use it or lose it!

Failing to plan can be a costly mistake. Kelleher + Holland, LLC has locations and attorneys licensed in Florida that can assist you with proper estate planning solutions. Contact our estate planning team or visit our website to schedule a free consultation.

K+H Estate Planning Attorneys