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Andy Hart Discusses Spousal Lifetime Access Trusts (SLATs) with U.S. News & World Report

With lower federal exemption levels on estate and gift taxes potentially coming under the Biden administration, it is crucial for high-net-worth families to look at alternative estate planning strategies. One particular tactic that is garnering attention among the wealthy are spousal lifetime access trusts, also known as SLATs. But what exactly is a SLAT? And, how can you create one? U.S. News & World Report recently spoke with Delegate Advisors CEO Andy Hart for insights.

According to U.S. News & World Report, a SLAT is “an estate planning strategy in which one spouse gifts an asset in an irrevocable trust that benefits the other spouse, removing the assets from their joint estate.” While it may sound simple, setting one up is often not and a SLAT that is poorly created has the potential to be rejected by the IRS. That is why Hart believes that it is imperative that couples work with both an experienced financial advisor and an attorney who is familiar with tax law.

“Make sure you’ve got really experienced counsel and you understand the fundamental concept of why you’re doing this, for what purpose and for whose benefit,” Hart tells the publication. “You can design these to be a completed gift for future generations. But at the same time, it’s a current potential benefit for your spouse.”

When contemplating the amount of assets to place in the SLAT, Hart says families should look at how much wealth they currently have and how much their family members will need in the future. “The hope is you never need to touch this money,” he explains.

Unfortunately, like most estate planning strategies, SLATs come with some potential pitfalls you should avoid. One particular risk to be aware of is that, since the trust is irreversible, divorce or death of the recipient spouse may result in the donor losing access to the SLAT’s assets. “That’s why it’s really important not to put too much into the trust for the benefit of others if you really might need the money,” says Hart.

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