9 Reasons This Popular Trust Isn't Just for the Super-Wealthy

For married couples, the most common estate planning technique used in 2020-2021 was the spousal lifetime access trust (SLAT), according to Martin M. Shenkman, a CPA and attorney whose firm, Shenkman Law, focuses on estate and tax planning. A SLAT is an irrevocable trust set up while both spouses are still alive, in which one spouse is the designated beneficiary of the other spouse. SLATs have been an increasingly popular estate planning tool for married clients with a net worth above the current estate planning exemption. This is the case for several reasons, Shenkman said during a Kitces.com webinar on Nov. 1. SLATs allow clients to move assets out of their estates and, for many, out of the reach of creditors and claimants, Shenkman noted. But each spouse can still reach the assets, he said, adding they are a "valuable planning tool to protect assets for retirement." They are, however, commonly overlooked as a planning strategy by advisors and certified financial planners for clients with $1 million to $10 million in net worth, he pointed out. After all, he said: "The typical applications don't make a lot of sense for the majority of your clients." However, SLATs can be used for clients at various wealth levels to reduce uncertainty, optimize taxes, protect assets from creditors and address concerns related to aging, Shenkman said. Because SLATs are so rarely considered for clients who aren't ultra-wealthy, there is a unique opportunity for advisors to provide more value to their clients who have a net worth below the estate tax exemption — $12.06 million, rising to $12.92 million in 2023 — by collaborating with an attorney to establish a SLAT that factors in the client's comprehensive financial plan, according to Shenkman. See the gallery for 9 reasons SLATs have become such a hot estate planning technique, even for clients worth $1 million to $10 million now, according to Shenkman.