Introduction to Gift Planning with Flexibility
Importance of Gift Planning with Flexibility in Current Economic Scenario
Spousal Lifetime Access Trust (SLAT)
Considerations for Creating a SLAT for Married Couples
If both spouses want to create a SLAT, be careful not to make the trusts identical to one another. If they are created at the same time, funded with the same amount of assets and contain the same terms, it is possible they will not withstand scrutiny.
The term “spouse” has some flexibility. The spouse could be the current spouse, the current spouse and a future spouse, or a future spouse for someone who is not yet married.
Special Power of Appointment
Special Power of Appointment is a power granted to a person to direct trust assets to a specified person or class of people (other than the power holder, the estate of the power holder or the creditors of either one). The power holder may direct distributions to one or more people, change the beneficiaries of the trust and/or change the terms of the trust, as long as the changes are consistent with the power of appointment.
Note the following:
Guidelines for Granting Special Power of Appointment
The permissible appointees of a power of appointment can be broad or narrow, and the grantor may even be a permissible appointee for outright distributions.
If the grantor is a permissible appointee, special care must be taken when naming the power holder(s) to avoid any challenge that the trust was always intended for the grantor. The trust may need to have multiple power holders, or a third party, to agree to any distributions.
Role and Powers of Trust Protector
Use of Disclaimer for Unwanted Gifts
Benefits of Planning with Promissory Notes in Gift Planning.
Speak with your estate planning attorney to determine which, if any, of these strategies is the right fit for you and your family. While it is impossible to know exactly when and how the federal exemptions will change, there are many different tools that can be used while waiting for any changes.
Reference: Financial Advisor Magazine (Sep. 10, 2020) “Five Ways to Build Flexibility Into Your Gift Planning”
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