by Teresa L. Bush, Esq., Director of Education and Support Services, InterActive Legal
A spousal lifetime access trust – which is becoming better known by its SLAT acronym – can be designed in a variety of ways. It can be a grantor trust for income tax purposes, it can be designed to prevent generation-skipping transfer taxation, it can include continuing trusts for descendants in a variety of forms, and it can own life insurance on the grantor, if desired. But at its core, it’s a trust that is irrevocable, for the benefit of the grantor’s spouse.
In InterActive Legal, this means you find the “SLAT” in the category called “Irrevocable Trusts.” You can start there with any profile, and create the trust needed by your client – turning on options that apply and disabling those that are not necessary for your particular situation.
For advanced planning, spouses are often creating trusts for each other, but doing so in a way intended to avoid the Reciprocal Trust Doctrine. For that reason, in Wealth Transfer Planning, you’ll find specific profiles designed to create two trusts that are dramatically different, one funded by each spouse. We’ve labeled these trusts as Spousal Non-Reciprocal Gifting Trusts, and they are located at the bottom of the list of comprehensive Irrevocable Trust profiles, as shown below:
On a related topic, a new trust document called the Special Power of Appointment Trust (or “SPAT”) was added to Wealth Transfer Planning earlier this year, along with Spousal Non-Reciprocal SPAT profiles to help streamline your drafting (see below). SPATs can be created for both married and unmarried clients. SPATs for married clients are much like SLATs but with additional features – definitely worth a look for 2020 year-end planning.
CRUTs and NIMCRUTs are available in the Trusts section of Wealth Transfer Planning. (Please note, we do not currently draft any type of charitable trust as part of InterActive Drafting Services*.)
Every InterActive Legal drafting system includes profiles for Wills and Revocable Trusts that include no tax planning at all. To clarify – the tax planning options are still visible and available to the drafting attorney in the document interview, but they are not enabled and can be ignored, making the drafting process quicker. Rather than focusing on tax issues, the drafter can instead consider options for property disposition, including a variety of trusts for a surviving spouse or partner, descendants, or others. SNT or see-through trust provisions can be added when needed, and client-specific scenarios such as blended families or particularly meaningful assets (or pets!) can be addressed to the client’s specifications.
InterActive Legal subscribers can take advantage of InterActive Drafting Services* to prepare these standard estate planning documents, as well as documents that also include estate tax planning, for a nominal fee, if desired.
Life as an estate planner at the end of 2020 can range from high-net worth tax planning via multi-generational irrevocable trusts to routine planning for those of modest wealth who want to take care of their families in the best way possible. It’s an interesting time, to be sure, and we at InterActive Legal are glad to help you provide valuable estate planning services to your clients.
If you’re an InterActive Legal subscriber with drafting questions, send them to our content team attorneys at [email protected].
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Meet the Author
Teresa Bush joined InterActive Legal in 2007 and serves as Director of Education and Support Services. Ms. Bush has been licensed to practice law since 1991, and focused her practice exclusively on issues of estate and gift tax planning, probate, charitable planning, and estate and trust administration. She began her practice in a small law firm, planning for clients of all levels of wealth. Thereafter, she practiced for a number of years in the Tax Section of Kelly, Hart and Hallman, P.C. in Fort Worth, Texas, and as an estate and gift tax consultant for the Dallas office of Ernst & Young, in both cases focusing on planning for very high net worth clients. Ms. Bush received her J.D. from the University of Texas School of Law, where she was a research assistant for Professor Stanley M. Johanson. She studied at Edinburgh University and the London School of Economics prior to obtaining a B.A. in Economics and Political Science from Rice University in Houston. While studying abroad, she worked as an intern for a Member of Parliament in the British House of Commons. Ms. Bush taught legal research and writing as a Teaching Quizmaster in law school, and later taught estate planning extension courses for American College of Financial Services CLU candidates. She has presented several online webinars on estate planning and drafting topics, and is the author or co-author of a variety of estate planning articles.