Spousal Lifetime Access Trusts: Income, Gift, Estate and GST Tax, State Limitations, Building in Powers and Options

Note: CPE credit is not offered on this program

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, April 14, 2020

Recorded event now available

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Program Materials

This CLE webinar will guide trusts and estates counsel on leveraging spousal lifetime access trusts (SLATs) in estate planning in light of the current tax law. The panel will discuss critical issues and pitfalls to avoid concerning income, gift, estate and GST taxes, key state law challenges and limitations, structuring or modifying trusts to building powers and options, and other items to minimize tax liability and ensure multi-generational gifting and flexible long-term planning.

Description

The current estate tax exemption will expire in the year 2025, creating uncertainty and delays for constructing estate plans due to potential tax law changes. The use of SLATs can reduce possible future federal and state estate taxes and provide flexibility if there is a shift in the current tax regime.

A SLAT is an irrevocable trust created by one spouse for the benefit of the other by using the gift tax exemption to make a gift to the SLAT, naming the other spouse as a current beneficiary. Children and grandchildren benefit after the beneficiary spouse's death. This allows limited access to the beneficiary spouse to the same assets and offers flexibility in structuring the trusts for client needs if estate planners effectively build in specific powers and options.

Trusts and estates counsel must have a clear understanding of critical tax issues that may arise. The estate and gift tax exemption of $11,580,000 per individual can be used during life or at death, allowing SLATs to be used as a useful tax savings tool when structured correctly. It can apply to a variety of assets, both liquid and illiquid, allowing them to flow to the next generation outside of the estate tax regime.

Listen as our panel discusses critical issues and pitfalls to avoid with income, gift, estate, and GST taxes when using SLATs. The panel will address state law challenges and limitations, structuring trusts to build in substitution powers, and other items to minimize tax liability and ensure multi-generational gifting and flexible long-term planning.

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Outline

  1. Considerations for the use of SLATs in estate planning
    1. Access to trust assets
    2. Choice of trustee
    3. Impact of joint property
    4. Building in substitution powers and options
  2. Critical tax considerations under the current tax regime
    1. Dual trusts (reciprocal trust doctrine)
    2. SLATs as grantor trusts
    3. Divorce
    4. Other tax issues
  3. Potential state law limitations
  4. Other alternative methods for multi-generational gifting and long-term planning

Benefits

The panel will review these and other key issues:

  • What are the critical considerations for the use of SLATs in estate planning?
  • What are the state law limitations?
  • How can you build in substitution powers and options in SLATs, and what are the pitfalls to avoid?
  • What is the impact of joint property?
  • What tax issues arise in the use of SLATs under current tax law?
  • How does a divorce impact SLATs?
  • What other methods are available for multi-generational gifting and long-term planning?

Faculty

Bean, Luke
Luke C. Bean, LLM

Partner
Rico, Murphy, Diamond & Bean

Mr. Bean concentrates on estate planning, developing strategies to transfer wealth efficiently using sophisticated...  |  Read More

Crotty, Kenneth
Kenneth J. Crotty, J.D., LL.M.

Partner
Gassman, Crotty & Denicolo

Mr. Crotty practices in the areas of estate planning, health law and corporate & business law.

 |  Read More

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