SLATs: An Estate Planning Acronym to Remember


In recent months, we have continued to impress upon our clients the need to re-evaluate each and every one of their estates due to the changing gift and estate tax laws.  For those of you who are not aware, the end of the 2012 calendar year marks the end of the current $5 million dollar estate and gift tax exemption.  Recent posts have highlighted the importance for individuals, having a net worth in excess of $5 million dollars, to consider gifting up to $5 million dollars away in order to utilize the current exemption by the end of the year.

In advancement of the current theme of year-end gifting, SLATs (Spouse Limited Access Trusts) offer married clients another option when considering whether to make a gift this calendar year in order to take advantage of the current estate and gift tax exemptions.  SLATs allow for each spouse to set-up an irrevocable trust for the benefit of their significant other.  Spouse 1 will irrevocably gift to a trust an amount of assets up to that $5 million dollar exemption.   The trust will hold such funds for the benefit of Spouse 2 during Spouse 2’s life and, upon Spouse 2’s death, distribute the proceeds to the family of Spouse 2 tax-free.  Spouse 2 will set up a similar trust for Spouse 1.

The trusts will function as an irrevocable gift, removing the subject assets out of the gifting spouse’s estate and utilizing the exemption amount.  While this may seem easy on its face, there are many detailed intricacies and pitfalls to this form of planning that require the proper oversight of an estate planning attorney.  However, for those with considerable wealth who are looking to save estate and gift taxes later in life, this is a great opportunity to exempt up to $10 million dollars between spouses, which will go by the wayside at the end of 2012.

While this type of planning is not for everyone, this is one of the many options individuals and couples have to consider in the remaining days of 2012.  Don’t let this great opportunity pass you by.  Call us to discuss your options.

– Adam Abramowitz, Esq.  

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