Estate planning is not just about deciding who gets what when you pass away. With the right tools, you can also safeguard your family’s wealth against substantial tax liabilities long before that day comes.
As a New Hampshire head of household, you have powerful options available to you. One of the most effective is a trust structure known as the spousal lifetime access trust, commonly referred to as a SLAT.
What is a spousal lifetime access trust?
A spousal lifetime access trust is a permanent, legally binding trust that one married partner sets up to provide financial protection to the other. The spouse who funds the trust transfers assets into it, which legally excludes those assets from their taxable estate. In fact, setting one up correctly as part of a well-rounded estate plan can make a meaningful difference in how much wealth you ultimately pass on to your family.
Four ways a SLAT reduces your estate’s tax burden
Now that you understand what a SLAT is, it helps to see exactly how it works in your favor. Once you establish a SLAT, it can mitigate your estate’s tax burden in four meaningful ways, such as:
- Removes assets from your taxable estate: When you transfer assets into the trust, they legally leave your estate and no longer count toward your estate tax liability at death.
- Shields future growth: Any appreciation of the trust’s assets escapes estate taxes, so the more your investments grow, the more your family benefits.
- Provides a double estate exclusion: The trust assets remain outside both spouses’ taxable estates, shielding them from taxes regardless of who passes away last.
- Shifts income tax responsibilities: SLATs typically function as grantor trusts, meaning you pay the income taxes on trust earnings, which allows the trust to grow tax-free while further reducing your taxable estate.
Together, these four advantages make SLATs a compelling instrument for long-term tax savings. Thus, understanding how these benefits work is the first step toward building a stronger financial future for your family.
Preserve your wealth for the people who matter most
Your family’s financial future deserves thoughtful and strategic planning. SLATs are just one of many instruments that, when you use them correctly, can help you preserve more of what you have diligently built. This is why dedicating time to understand your estate planning options today can make a lasting impact for the generations that follow.
