Have you and your spouse completed a comprehensive Florida estate plan? Have you and your spouse considered any trust planning to be sure your goals for yourself, your family, and your legacy are reached? There may be updated planning opportunities for you. We would like to share information about the Spousal Lifetime Access Trust, commonly referred to as a “SLAT.” This is an estate planning tool you could consider adding to your estate plan. It will allow you to remove up to $12.06 million from your estate and place it in an irrevocable trust for your spouse. 

Originally, the goal of the SLAT was that when you removed up to $12.06 million from your estate and placed it in an irrevocable trust for your spouse, he or she could then use and access those funds during his or her lifetime. This benefit is great because it allows your spouse to use distributions from the irrevocable trust while you are both living while at the same time avoiding the estate tax and isolating those assets from creditors.

We now want to bring SLAT-based planning to your attention because there may be new planning opportunities to consider. Previously in Florida one of the main disadvantages of a SLAT was that upon the death of the beneficiary spouse, the grantor spouse would lose the ability to indirectly benefit from the SLAT’s assets that previously could have been utilized for the benefit of the beneficiary spouse. However, there is a new statute specifically addressing this issue.

The new Florida law has changed the landscape surrounding SLAT-based planning and we want to share how with you now. The new law has removed one of the disadvantages surrounding this form of estate planning. Initially, at the death of the beneficiary spouse, the grantor spouse lost the ability to benefit from the SLAT’s assets that were designated for him or her. Under the new law, however, at the death of the beneficiary spouse, the grantor spouse can access the assets. It appears that the new laws allows this to be done while still keeping “the assets of the SLAT outside of the grantor spouse’s estate and shielded from the grantor spouse’s personal creditors.”

Be aware that this new planning consideration will only apply to trusts created and funded after June 30, 2022. There are a few more considerations to be aware of as well. First, the grantor spouse will not be able to be added should there be a divorce between the spouses. Second, it is possible that the IRS will consider the assets in the SLAT as a part of the grantor spouse’s estate if he or she is made a beneficiary. These are both important planning considerations that you need to discuss with your experienced Florida estate planning attorney.

When it comes to Florida estate planning regarding SLATs, we highly recommend that you meet with your Florida estate planning attorney to find out if you and your family would benefit from a SLAT, especially in light of the changing laws. Your Florida estate planning attorney can review your finances and your estate planning goals to help make recommendations regarding the best estate planning vehicles, including SLATs, to preserve your assets for your family and minimize any adverse tax consequences.

At the Perlin Estate Planning & Probate our credentials enable us to provide a multi-disciplinary approach to our legal services.  By building relationships with our clients, we are also able to understand each client’s needs and desires, and we support such goals through thoughtful, comprehensive planning techniques. We encourage you to contact us and schedule a meeting.