SLATs: Ultra-Wealthy Families' New Tool for Estate Tax Reduction and Asset Protection
Spousal Lifetime Access Trusts (SLATs) are gaining traction among ultra-high-net-worth families for their potential to reduce estate taxes and protect wealth. These irrevocable trusts, established by one spouse for the other, remove assets from the grantor's taxable estate while providing financial flexibility to the beneficiary spouse.
Royce Ramey, CFA, co-CEO of Versant Capital Management, a multifamily office serving ultra-wealthy families in Dallas and Phoenix, highlights the benefits of SLATs. With the current federal gift and estate tax exemption at $13.99 million, SLATs can lock in this exemption by transferring assets out of the grantor's estate.
Properly structured, SLATs can shield assets from creditors of both the grantor and beneficiary spouse, offering robust protection for family wealth. They can also support long-term legacy planning, benefiting children and grandchildren, and potentially leveraging the generation-skipping transfer (GST) tax exemption.
However, SLATs must be carefully constructed to avoid pitfalls like the reciprocal trust doctrine. Families with a net worth exceeding $30 million or holding highly appreciating assets may find SLATs particularly useful.
SLATs, while complex, can be powerful tools for ultra-wealthy families seeking to minimize estate taxes, protect assets, and plan for future generations. As with any sophisticated estate planning strategy, it's crucial to consult with experienced professionals to navigate potential challenges and ensure the best outcomes.
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