From Yahoo Finance: 2025-06-12 13:27:00

High-net-worth couples use tools like SLATs to lower tax obligations and pass on wealth. SLATs are irrevocable trusts that let spouses maintain access to assets while avoiding estate taxes. Future asset growth is moved out of the estate, leading to significant tax savings. SLATs are an estate tax strategy, not an income tax strategy.

SLATs allow beneficiaries to withdraw income or principal, unlike other trusts. Drawbacks include irrevocability and inability to transfer jointly owned assets. Grantors should ensure they can maintain their lifestyle without access to funds. Assets pass to beneficiaries tax-free if the beneficiary spouse dies before the grantor.

SLATs are popular due to the potential sunset of the TCJA, doubling the estate tax exemption. The transfer to a SLAT is reported on a gift tax return, affecting the donor’s lifetime exemption. Financial advisors warn of a race-against-the-clock mentality for high-net-worth families. Making a gift before the exemption potentially halves is advised.

Couples should be cautious of prematurely gifting assets if the exemption is extended. The expanded exemption may lead to unnecessary restrictions on accessing funds. SLATs offer a way to pass on wealth while minimizing tax obligations.



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