SLATs are irrevocable trusts that let the spouses maintain access to their assets while keeping them out of their taxable estate. A growing number of wealthy customers are using them to take advantage of high estate and gift tax exemptions, a strategy that can lead to significant tax savings over a lifetime.
Here’s how it works: One spouse, called the grantor, transfers her individually owned assets from her estate into the SLAT for the benefit of her spouse, called the beneficiary. Once removed from the grantor’s estate, the future appreciation of the assets is also removed, meaning those gains won’t be taxed.
But the couple aren’t cut off from the money: The beneficiary spouse can access the assets in the SLAT for health, education, maintenance, and support for both him and his spouse, says Bob Peterson, senior wealth advisor at Crescent Grove Advisors. “Some would say you are having your cake and eating it too.”
Subscribers to Fortune can read the article here. The full text is also available here.