Navigating the Uncertain Future of the Estate Tax Exemption: Consider a Spousal Lifetime Access Trust (SLAT)
The Future of Estate Tax Exemption: Should You Consider a Spousal Lifetime Access Trust?
With the fate of the estate tax exemption hanging in the balance, many individuals are looking for ways to protect their assets and minimize tax liabilities. One strategy that is gaining popularity is the use of a Spousal Lifetime Access Trust (SLAT). This type of trust allows individuals to transfer assets outside of their estate, potentially saving on estate taxes in the future.
What’s Happening to the Estate Tax Exemption?
Currently, the federal estate tax exemption is at a historic high of $12.92 million for individuals and $23.4 million for couples in 2023. However, unless Congress takes action, this exemption is set to revert to $5.49 million (adjusted for inflation) in 2026. This looming change has many people considering their options for estate planning.
What Is a Spousal Lifetime Access Trust (SLAT)?
A SLAT is an irrevocable trust that allows one spouse to make a gift to the trust for the benefit of their spouse. This type of trust can help individuals take advantage of the current high exemption amounts by moving assets out of their taxable estate. The beneficiary spouse can still access the funds in the trust as needed, providing a level of flexibility.
Pros and Cons of a SLAT
There are several benefits to establishing a SLAT, including potential tax savings, asset protection, and indirect access to the funds. However, there are also drawbacks to consider, such as loss of control over the assets and potential tax implications for the donor spouse.
Consult with an Estate Planner
If you are considering setting up a Spousal Lifetime Access Trust, it is important to consult with an estate planning attorney who can help you navigate the complexities of trust creation. They can assist you in structuring the trust to meet your specific needs and ensure that it is in compliance with current laws and regulations.
Given the uncertainty surrounding the estate tax exemption, now may be an opportune time to explore the benefits of a SLAT for your estate planning needs. Contact an estate planning attorney today to discuss whether a Spousal Lifetime Access Trust is the right choice for you and your family.