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Protect Assets With a Spousal Lifetime Access Trust

Protect Assets With a Spousal Lifetime Access TrustHigh net-worth couples that want to protect and maximize their $10.86 million gift tax exemption but don’t want to lose access to income and principal should consider a spousal lifetime access trust (SLAT).

A spousal lifetime access trust is essentially an irrevocable trust that one spouse sets up for the benefit of the other spouse, and allows the donor spouse to retain indirect access to the trust’s income and principal. Here’s how it works:

Spouse1 creates a SLAT to benefit Spouse2 and funds it with his or her $5.43 million gift exemption. During Spouse2’s lifetime, the trustee (which can be Spouse2) can distribute income and principal as needed for Spouse2’s support. Spouse2 can also withdraw five percent of the trust principal or $5,000 (whichever is greater) each year.

Spouse1 has indirect access to the principal and the income, and when Spouse2 dies, the trust property (and any appreciation) passes free of estate taxes to the children.

If Spouse1 wants to retain indirect access to the trust’s income and principal after the death of Spouse2, this can be accomplished by Spouse2 creating an irrevocable life insurance trust for Spouse1’s benefit.

If spouses decide to establish SLATs for each other, it is important that the language of each trust differ so as not to appear to be reciprocal trusts, which would cause each SLAT’s assets to be included in each spouse’s estate after they die.

An attorney experienced in Florida estate planning can help you protect your assets and plan for your financial future. Contact our Fort Myers estate planning law firm for a free consultation.

Categories: Trusts
dorcey law firm
The Dorcey Law Firm, PLC - Fort Myers Attorney
Located at 10181 Six Mile Cypress Pkwy, Suite C, Fort Myers, FL 33966
Phone: (239) 330-6674
Local Phone: (239) 418-0169