Exploring the Spousal Lifetime Access Trust

A settlor may use the Spousal Lifetime Asset Trust (SLAT) for the continued benefit of a spouse and children. A SLAT is an irrevocable trust that potentially reduces exposure to estate taxes while providing the beneficiary-spouse with access to the trust corpus or trust income. With other estate planning tools, a bypass trust for example, the settlor-spouse must have passed away for the surviving spouse to access trust assets. Another major benefit of the SLAT is that the beneficiary-spouse can access trust funds using the gift tax exemption without suffering a “permanent loss.” While a SLAT has a number of beneficial characteristics, there are some considerable potential drawbacks. Notably, in the case of divorce or death, the settlor-spouse might not have access to assets in the trust.

See Inna Fershteyn, Esq., Exploring the Spousal Lifetime Access Trust, Brooklyn Trust & Will, April 17, 2018.

Special thanks to Alexander Evelson for bringing this article to my attention.