July 2021 Issue: What Financial Advisors need to know About SLATS Now-What Financial Advisors need to know About SLATS Now by Martin M. Shenkman

What Financial Advisors need to know About SLATS Now by Martin M. Shenkman

Pdf Summary

Spousal lifetime access trusts (SLATs) are becoming popular estate planning tools as individuals anticipate new estate tax legislation. Financial advisors need to understand the role they play in SLAT planning and why clients should create these trusts before potential tax changes take effect. SLATs are trusts that one spouse creates for the other, offering asset protection and transfer benefits. With the introduction of the For the 99.5% Act, which could significantly change estate tax planning, creating SLATs now can help individuals avoid potential gift and estate tax limits. However, there is uncertainty regarding the exact form and timing of these tax changes. SLATs pose a risk of losing access to trust assets if a spousal beneficiary dies before the other spouse. This risk can be addressed by modifying the terms of the trust and considering the use of life insurance. Financial advisors play a crucial role in providing financial modeling and insurance planning to determine the amount of wealth to transfer to SLATs and ensure clients have adequate resources for lifestyle expenses. They can also help address potential challenges from creditors and avoid the reciprocal trust doctrine. It is important for financial advisors to review existing SLATs with clients and be actively involved in all aspects of the planning process. For clients without SLATs, time is running out to complete planning before new legislation takes effect, so advisors should encourage immediate review and involvement in the planning process.

Keywords

Spousal lifetime access trusts

SLATs

estate planning

estate tax legislation

financial advisors

asset protection

transfer benefits

For the 99.5% Act

gift and estate tax limits

trust assets