Spousal Lifetime Access Trust Attorneys | SLAT

In today’s constantly evolving estate planning landscape, finding a strategy that helps you preserve your wealth while remaining flexible is essential. Enter the Spousal Lifetime Access Trust (SLAT), an estate planning tool for married couples looking to optimize their finances while navigating tax laws and inheritance.

What Is a Spousal Lifetime Access Trust?

A Spousal Lifetime Access Trust allows you to place assets into a trust benefitting your spouse or family members. This arrangement helps reduce both spouses’ combined estate value to potentially lower taxes.

While SLATs are irrevocable, you can still benefit from the trust as long as you remain married. Your spouse can withdraw money from the trust to pay for living expenses and other needs for both of you. However, removing money from the trust is generally not advisable, as it then becomes subject to estate taxes again.

If your spouse passes away, the remaining funds in the trust will go to any remaining beneficiaries, such as your children or grandchildren. They will not have to pay taxes on the inheritances they receive from the trust either, making this trust a great option to protect your legacy while reducing the amount of taxes your beneficiaries pay.

Spousal Lifetime Access Trust Pros and Cons

Before placing assets into a SLAT as part of your estate planning, take some time to understand the pros and cons this type of trust provides:

Pros

Flexible withdrawals: The beneficiary spouse can choose whether they want to withdraw funds from the income or principle to maintain their lifestyle.
Greater control over assets: When you establish the trust, you will decide how and when your heirs will receive their assets, allowing for structured financial support, such as staggered distributions, based on a specific age or life milestone.
Asset protection: Any assets you place into the trust are free from creditors and legal claims, so if your spouse or children face any lawsuits, the trust assets will remain safe.
Exclusion from taxable estate: Any assets in the SLAT are not part of your taxable estate, allowing more funds to transfer to heirs without tax liability.

Cons

Limited donor access: Once you decide to place assets in a SLAT, you cannot access your funds, which may be a concern if you face unexpected financial needs later in life.
Dependency on marriage: The benefits of a SLAT depend on the couple remaining married throughout the donor’s lifetime. If the couple were to divorce, the beneficiary spouse would no longer have access to assets.
Complex to set up: Establishing a SLAT requires an expert estate attorney to draft the trust documents and understand all tax implications.
Potential tax implications: If the beneficiary spouse withdraws distributions from the trust early, those funds become taxable again.

Situations Where a SLAT Is Beneficial

While many tools are available to assist with estate planning, it’s important to choose an option that offers the most benefit for your specific financial needs. Some situations in which a SLAT is your best option include:

You are a high net worth couple: If your combined estate is worth more than $5 million, a SLAT is a great way to reduce estate taxes while still providing funds for the other spouse.
You want to transfer wealth to other generations: Families who want to pass wealth to their children or grandchildren can benefit from a SLAT to ensure their assets grow without taxes or penalties.
You want to safeguard your wealth: If you work in a profession with a high risk of lawsuits, using a SLAT can protect your trust assets from creditors and other legal claims.
You want to plan for future changes: Creating a SLAT can be a great tool to lock in current exemptions and protect your assets from future tax liabilities.

Choose Crow Estate Planning & Probate to Protect Your Legacy

Keeping your legacy safe is easy when you choose Crow Estate Planning & Probate for your estate planning needs. Our team has years of experience helping individuals and couples keep their assets safe, and we look forward to providing you with the same exceptional service. Contact us today to learn more about our services for residents across Tennessee and Kentucky!

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Today my wife and I completed (at Crow Estate Planning and Probate) our Will, Living Will, Power of Attorney for Finance and Medical. As a Tennessee CPA for over 20 years (now retired), I’d like to leave this review so that others may benefit. Our experience rating with with Crow Estate Planning and Probate is EXCELLENT. Our legal team was Kyle Shannon, Callie and Julia. This team was competent, courteous, and professional. They made a potentially complex experience “easy” despite multiple minor trusts involved. The charge for professional services rendered was very reasonable. My wife (Denise) and I would like to thank Kyle and his team (Callie and Julia) for a great experience that exceeded our expectations. I will return for legal needs and I will refer family and others to Kyle, Callie and Julia.

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