James Contini: SLATs are the hot estate planning tool in 2020

Spousal Limited Access Trusts (SLATs) are a great estate planning tool and have continued to emerge in 2020. The federal estate tax exemption is $11.58M per person, but in 2026 the estate tax exemption is expected to be reduced to somewhere around $5M–$6M. 

A lot of these potential changes will obviously depend on who wins the presidential election. If Joe Biden wins, there are predictions that the estate tax will be lowered before 2026. 

Due to the uncertainty, many high net worth individuals are moving to lock in their estate tax exemptions. The IRS has stated that there is something like a grandfather clause that will keep you locked in if you use more of your exemption now than the amount of the exemption that exists in the year you die. 

A SLAT is a trust that one spouse creates and the other spouse is the trustee and the beneficiary. The other spouse is also allowed to use the assets that are in the trust. Essentially, the creating spouse is making a gift to the trust, using their tax exemption.

“The purpose of this is to lock in the use of the exemption in case the exemption is reduced later on in the year of death.”

The SLAT is great because even though the assets have been “gifted” the family unit still has access to those assets.

See James Contini: SLATs are the hot estate planning tool in 2020, The Times-Reporter, October 4, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.