Spousal Lifetime Access Trusts (SLATs)
A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust designed to benefit a spouse while providing asset protection and estate tax advantages. The grantor transfers assets into the trust, which can then provide income or principal distributions to the beneficiary spouse during their lifetime.
By using a SLAT, the grantor can effectively remove assets from their taxable estate while still allowing their spouse to access those assets if needed. This can be particularly beneficial for couples looking to minimize estate taxes upon their death. However, once the assets are placed in the trust, the grantor relinquishes control over them, making it essential to consider the implications carefully.
For example, if a husband establishes a SLAT and funds it with investments, the income generated can be distributed to his wife, providing her financial support while also reducing his estate’s value for tax calculations.
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