A Spousal Lifetime Access Trust or SLAT trust is a facility often used to reduce estate taxation. Here’s some information on how this trust works and it’s benefits for married couples, from a top estate planning attorney in New Jersey.
How Does A SLAT Trust Work?
Unlike other bypass trusts like the marital deduction trust and family/spousal bypass trust, this trust is created during your lifetime rather than at the point of your death. It is an irrevocable trust designed to support the surviving spouse and children/dependents and are generally treated as grantor trusts, so the grantor will be responsible for paying the income tax of the trust.
Essentially, what happens is that the grantor of the trust makes a gift for transfer tax purposes but names their spouse and dependents as the recipients of the gift. The SLAT trust allows the gift to remain untouched, allowing assets to grow free of federal or estate tax, while still making the amount available to the grantor indirectly through their spouse if needed. It is important therefore to carefully consider the legal implications of a divorce, remarriage or death of a spouse, as the SLAT is irrevocable and beneficiary interests are not going to change once the trust is in place.
Some of the most notable benefits of a SLAT trust include:
- Avoiding probate.
- Protection of assets from creditors or claims in the event of a divorce, etc.
- Reduction or avoidance of estate tax.
- Trust can grow tax-free.
- Reduction or avoidance of capital gains on death tax.
- Can function as life insurance trusts.
Set Up a Comprehensive Estate Plan with a NJ Estate Planning Specialist
At Sedita, Campisano and Campisano in New Jersey, estate planning attorney Frank Campisano is ready to assist you with all your estate planning needs – whether you need to make a business succession plan, Last Will and Testament, Power of Attorney, a Living trust, SLAT trust or to minimize inheritance tax on your estate.
Contact us today and let us deliver expert estate planning advice to take care of all your wishes – whether your business is big or small. For more information, please visit our website at https://www.scclegal.com/