Do you and your spouse have a Florida estate plan? Over the past year, we have shared key articles with you on the types of trust planning you can complete to ensure that your goals for yourself, your family, and your legacy are reached. One of the articles that many of our couples contemplating Florida estate planning want to read focuses on the Spousal Lifetime Access Trust. Commonly referred to as a “SLAT” this is an estate planning tool you should consider adding to your estate plan as it allows you to remove up to $12.06 million (increased to $12.92 million in 2023) from your estate and place it in an irrevocable trust for your spouse. You can read our full article on this estate planning tool by clicking this link.
We want to bring SLAT-based planning to your attention now because there may be new planning opportunities to consider. Originally, the goal is that when you remove up to $12.06 million from your taxable estate and place it in an irrevocable trust for your spouse, he or she can then use and access these funds during his or her lifetime. The benefit is tremendous as it allows your spouse to use distributions from the irrevocable trust while you are both living while simultaneously avoiding the estate tax and isolating those assets from creditors.
Previously in Florida, one of the main disadvantages of a SLAT was that upon the death of the beneficiary spouse, the grantor spouse would lose the ability to indirectly benefit from the SLAT’s assets that previously could have been utilized for the benefit of the beneficiary spouse. However, a new Florida statute specifically addresses this issue.
The new Florida law has changed the landscape surrounding SLAT-based planning, and we want to share how with you. The new law has removed one of the disadvantages surrounding this form of estate planning. Initially, at the death of the beneficiary spouse, the grantor spouse lost the ability to be able to benefit from the SLAT’s assets that were designated for him or her. Under the new law, however, at the death of the beneficiary spouse, the grantor spouse can access the assets. It appears that the new laws allows this to be done while still keeping “the assets of the SLAT outside of the grantor spouse’s estate and shielded from the grantor spouse’s personal creditors.”
This new planning consideration will only apply to trusts created and funded after June 30, 2022. There are a few more considerations to be aware of as well. First, the grantor spouse will not be able to be added should there be a divorce between the spouses. Second, it is possible that the IRS will consider the assets in the SLAT as a part of the grantor spouse’s estate if he or she is made a beneficiary. Both are important planning considerations that you will want to discuss with your experienced Florida estate planning attorney.
When it comes to Florida estate planning regarding SLATs, we highly recommend that you see your Florida estate planning attorney to find out if you and your family would benefit from a SLAT, especially in light of the changing rules. Your Florida estate planning attorney can review your finances and your estate planning goals to help make recommendations regarding the best estate planning vehicles, including SLATs, to preserve your assets for your family and minimize any adverse tax consequences.
Our estate planning law firm takes a very different approach from what you might have come to expect. Our goal is to create lifelong relationships with each of our clients, to guide and manage your legacy for the rest of your life. Please contact our offices in Stuart and in Palm City to learn more.