Planning for the future means making plans and provisions for loved ones after you pass away. This likely means including certain estate planning tools that will allow you to take care of your spouse financially well into the future, and a specific type of trust can help you accomplish that. A spousal lifetime access trust could be a practical and simple way for you to protect assets for that purpose and know your loved ones are secure in the future.
A trust sets aside and protects assets for a specific use. Assets held in a SLAT will not go through probate, but a SLAT is irrevocable. This means once you place assets in a SLAT, you cannot access them directly or remove them. However, your spouse will be able to access and remove assets up to a certain amount without penalty, even if you are still alive. Therefore, you could protect your wealth without losing the benefit of being able to use it as you and your spouse choose.
Benefits of a SLAT
Once you create a SLAT, you can gift to the trust an amount that is part or all of your estate tax lifetime exemption. This means you can put more than $11 million of your taxable estate into a SLAT without penalty, and your spouse will have access to it. This can be a relatively simple way to protect your wealth and still ensure your loved ones have what they need in case you pass away.
One drawback to a SLAT is that if your spouse dies, you will no longer have access to the assets held in the trust. Your spouse’s beneficiaries will then receive the assets. If you and your spouse divorce, assess to the SLAT assets stays with your spouse. For some, these two potential drawbacks may be enough to consider other estate planning options instead.
What’s right for you?
A SLAT could be the right option for your estate plan. However, there are other types of trusts that could benefit you and your Louisiana family if this is not the right tool for your specific needs. It may be beneficial to learn about the various ways you can protect your wealth, shield your interests and secure a strong financial future for your loved ones before making any final decisions.