The current financial and political climate urges us to think about controlling and preserving our assets. Be proactive in protecting your wealth – you may consider reviewing your estate planning options well in advance of the election and be ready to implement any changes before year-end. Consider estate planning in a way that benefits you and your family regardless of election results and is tailored to fit your specific needs.
Transferring assets to a trust can be a great way to minimize liability exposure and take advantage of current estate tax/gift exemptions while allowing access to funds. One way to achieve these goals is a Spousal Lifetime Access Trust (SLAT).
How It Works
Generally speaking, a SLAT is a multi-generational trust established by one spouse (grantor) to benefit the other, as well as others not limited to children or grandchildren. The grantor transfers assets, via gift or sale, to a SLAT for the primary benefit of his or her spouse, allowing the grantor to properly plan for his or her estate/gift tax exemption. With proper SLAT planning, the spouse benefiting from the transfer can be both the SLAT’s trustee and the primary beneficiary. This means the benefiting spouse can maintain access to assets protected in the trust. Further, there are no adverse income tax consequences with SLATs while the grantor is alive.
Benefits
Protects future appreciation of assets in the SLAT from estate/gift and other transfer taxes
Allows for the efficient use of the estate/gift tax exemption
Provides protection from mental disability, creditors, divorces, etc.
Allows benefiting spouse and other beneficiaries access to the SLAT assets while alive
Utilizes the generation-skipping transfer tax (“GSTT”) exemption, avoiding transfer taxes over multiple generations
Can be utilized with discount planning to move additional wealth among generations, by way of income tax-free discount sale transactions
Yields additional advantages when leveraged with proper life insurance planning
Why Now?
The current estate/gift tax exemption is at an all-time high of $11.58 million, offering unprecedented opportunities for high net worth families to reduce their transfer tax exposure. Although this exemption level is in place through 2025, the results of the upcoming election could lower the estate/gift tax exemption, thereby shortening this window of opportunity to as soon as January 1, 2021. Any transfers made using today’s high estate/gift tax exemption amounts are protected from future taxes if those high exemption amounts are reduced.
Kelleher + Holland, LLC can provide you with the guidance you may need to navigate the many complex estate planning opportunities available. For assistance with strategies that can benefit you most, please contact one of our estate planning attorneys to schedule an appointment.
