SLANT

What is a Spousal Lifetime Access Non-Grantor Trust?

A SLANT is an irrevocable trust that is created by one spouse for the benefit of the other spouse (the “grantor”) for the benefit of the other spouse (the “beneficiary”). It enables the receiving spouse to benefit from the future appreciation of the trusts during their lifetime. The grantor may choose to implement this estate planning tool to shift income tax liability to the trust, reducing their taxable estate. Essentially, a SLANT is designed to provide a greater separation between the grantor and the trust’s income tax responsibilities.

Who benefits from a Spousal Lifetime Access Non-Grantor Trust?

1. Donor Spouse (Grantor)

The grantor may structure the trust to provide for both income and principal access. Contributions made to the trust may qualify for gift tax deductions, depending on the trust’s terms. The trust can be set up to avoid generation-skipping taxes by limiting distributions to the spouse, while future generations may have indirect access to assets. Key benefits include asset protection and potential tax reduction. 

2. Receiving Spouse (Beneficiary)

The beneficiary enjoys access to the trust’s assets and may receive regular distributions. The trust offers significant protection from the beneficiary’s creditors, lawsuits, and divorce so the beneficiary can sleep at night. While the beneficiary does not directly pay income taxes on earnings, they are responsible for any distributions received outright. Additionally, the dynastic provisions of the trust help to preserve family wealth across generations. 

What is the difference between a SLAT and a SLANT?

1. A SLANT is a non-grantor trust, meaning the grantor does not report income on his or her personal tax return. Whereas a SLAT is a grantor trust, and the grantor pays taxes on trust income.
2. SLANs typically offer more flexibility in terms of estate planning strategies and tax management than SLATs, making them a more versatile tool for certain clients. 

Limitations of a Spousal Lifetime Access Non-Grantor Trust:

• Higher Tax Rates: Trusts are often taxed at higher rates than individuals, so a SLANT may face a greater tax burden on earnings. 
• Irrevocability: A SLANT may not be changed by the grantor or anyone else. The grantor also lacks the access to change the trust 
• Divorce Impact: If the couple divorces, then the SLANT may lose some of its effectiveness, especially if the trust is structured with the spouse as the primary beneficiary.
• Complexity and Cost: Due to the complexity of drafting a SLANT,  legal fees may be higher due to their complex planning and expertise. 

Choose Icon for Spousal Lifetime Access Non-Grantor Trusts 

SLANTs can be an invaluable tool to reduce estate tax exposure, lifelong financial support to your spouse, and preserving wealth for future generations.

We have the experience, we have the pedigree, and we have the resources necessary to help execute your plan effectively. Let us help simplify your situation and leverage your opportunity.

We are here to help, email us at info@icontrustnv.com or call 702-998-3700.