Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

SPOUSAL LIFETIME ACCESS TRUSTS

Is a Spousal Lifetime Access Trust (SLAT) part of your estate plan? Many families today, for both Florida estate planning and Florida estate protection planning purposes, are utilizing SLAT’s to protect their assets. When both spouses are living, one spouse can establish this type of trust for the other spouse through the use of their lifetime gift tax exemption. A SLAT will typically name the non-gifting spouse as the beneficiary, and allow the trustee to make distributions to them during their lifetime. Upon the non-gifting spouse’s death, the trust assets can then pass to the designated trust beneficiary(s) under the specified terms and conditions of the instrument. For estate planning purposes, the non-gifting spouse can be given a limited power of appointment, effective at their death, which allows them to change how the SLAT assets will be distributed after the beneficiary-spouse’s death. This effectively gives them the ability to change the trust beneficiary(s) and the specified terms and conditions of the instrument. To maximize the asset protection benefits available with a SLAT, the gifting spouse should fund the trust using only their personal assets and not jointly held assets. The non-gifting spouse should only serve as a trustee if the power to make distributions to themselves is limited by an “ascertainable standard” (distributions can only be made for health, education, maintenance, and support). Under no condition should the gifting spouse serve as a trustee of the SLAT.