Spousal Lifetime Access Trusts: Gifting Assets, Beneficiary and Grantor Considerations, Annual Reporting Requirements

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, February 23, 2022

Recorded event now available

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Course Materials

This webinar will discuss how a spousal lifetime access trust can provide needed flexibility in estate planning. Our panel of transfer tax veterans will discuss the primary benefits and risks couples assume when establishing a spousal lifetime access trust (SLAT) and satisfying the annual reporting requirements for trust and estate professionals working with clients who have or may benefit from creating a SLAT.

Description

For 2022 the unified estate and gift tax exemption has been indexed to $12.06 million. However, this all-time high exemption is scheduled to sunset in 2025 and return to $5 million in 2026. This amount will also be indexed for inflation. A SLAT can help combat the constant flux of estate tax guidelines.

Gifting assets to a trust can remove the asset, and any future appreciation, from the grantor's estate and take advantage of the current estate tax exemption. A SLAT is an irrevocable trust created by a grantor spouse for the benefit of the other spouse. It provides lifetime distributions for HEMS (health, education, maintenance, and support) for the beneficiary spouse with a remainder interest usually passing to children or grandchildren. When appropriately structured, the distributions from the SLAT can benefit the grantor spouse by contributing half the payment of certain ordinary bills.

The caveats of these trusts are many. Often reciprocal trusts are formed, and if not appropriately structured, these mirror trusts could be included in both spouses' estates and subjected to creditor claims. Trust and estate advisers must recognize the merits and caveats of this flexible planning vehicle.

Listen as our panel of trust and estate professionals explains the nuances of SLATs.

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Outline

  1. Spousal lifetime access trusts: introduction
  2. Benefits and considerations
    1. Current state of estate tax
    2. Grantor
    3. Beneficiaries
    4. Trustee
    5. Distributions
    6. Other
  3. Caveats
    1. Reciprocal trusts
    2. Divorce and death
    3. Other
  4. State considerations
  5. Reporting requirements

Benefits

The panel will cover these and other essential issues:

  • Critical considerations for reciprocal trusts
  • Allowed distributions to the beneficiary spouse from the SLAT
  • Annual tax consequences to the grantor spouse establishing the trust
  • How to meet annual trust IRS reporting requirements for SLATs

Faculty

Edmondson, S. Gray
S. Gray Edmondson

Partner
Edmondson Sage Allen

Mr. Edmondson practices in partnership, corporate, and individual tax planning; business transactions, including...  |  Read More

Rounds, Susan
Susan P. Rounds, JD, CPA, LLM, AEPĀ®, TEP

Head of Wealth Planning for the Western Division
Deutsche Bank

Ms. Rounds partners closely with bankers and other relevant teams to build wealth planning business, serving UHNW...  |  Read More

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