Most estate planning strategies for gift tax exemption require no-strings-attached gifting. In an effort to minimize their death tax exposure, many high-net worth couples look for opportunities to transfer assets during their lifetime. However, even those high net worth families can be reluctant to lose all access to those assets, for fear of changing circumstances and future necessity.
In these situations, a Spousal Limited/Lifetime Access Trust (SLAT) may be an appealing strategy. This structure typically involves the purchase of life insurance and designates one spouse as the donor and the other as the beneficiary. This allows for distributions to the beneficiary trust through which the donor spouse can indirectly benefit.
In this article, I explore some of the fundamental SLAT planning techniques as well as the calculated use of life insurance within the arrangement.