Alec R. Borenstein Authors Article in Jewish Link, "The Ultimate Estate Planning Tool for Married Couples"
As we get closer to the Purim and Pesach season, it takes a lot to get the house in order for the holidays. But while we do all of that work, how well are we keeping our actual houses, i.e. our assets, in order and protected?
One estate planning tool married couples are using to protect their assets is the Spousal Lifetime Access Trust or SLAT. A SLAT allows one spouse to transfer assets into an irrevocable trust for the benefit of the other spouse, providing several financial, tax and estate planning benefits while still allowing indirect access to the assets through the beneficiary spouse. There are many reasons why married couples should consider creating SLATs, but we will focus on two.
First, asset protection against creditors. Once assets are transferred into the SLAT, they are generally shielded from the creditors of the grantor (the creator of the SLAT) and legal claims. This can be particularly valuable for individuals in high-risk professions or those concerned about potential lawsuits.
Second, estate taxes. Currently, the federal estate tax exemption is $15 million. New Jersey has no estate tax, while New York’s exemption is $7.35 million. If one spouse creates a SLAT for the other spouse, the grantor spouse can shield future appreciation from estate taxes by gifting assets into the SLAT for the benefit of his or her spouse. For many clients this is a massive estate tax savings, while still being able to derive some benefit from those assets through the spouse.
As with any planning, there are crucial downsides to consider, and you should talk with a knowledgeable trusts and estates attorney to ensure your SLATs are not considered “reciprocal trusts.”
SLATs offer a versatile and powerful tool for couples in a stable marriage looking to optimize their planning, reduce tax liabilities and ensure financial security for their spouse and future generations in an estate tax-efficient manner. If you think a SLAT is right for you and your spouse, contact Alec Borenstein at 201-639-2015 or aborenstein@pashmanstein.com to schedule a consultation.
The information contained herein is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to these materials do not create an attorney-client relationship between Alec Borenstein, Pashman Stein Walder Hayden P.C. and/or its attorneys, and the reader.
To read the full article in the Jewish Link, click here.