Florida Law Makes Spousal Lifetime Access Trusts More Attractive Estate Planning Option by Rachel Kenney Rego, CPA
In 2022, lawmakers amended Florida Statute Section 736.0505(3), giving new life to Spousal Limited Access Trusts (SLATs) and the unique estate planning benefits they provide to families within the state.
SLATs enable one spouse to create and fund irrevocable trusts during their lifetime for the benefit of a surviving spouse and future generations. The grantor spouse transfers assets he/she owns individually into the SLAT, removing them and their future appreciation from his/her taxable estate. One of the unique benefits of a SLAT is that it generally allows the beneficiary spouse to direct distributions of trust assets to him/herself and his/her donor spouse during his/her lifetime. In other words, the grantor has indirect access to the trust assets as long as he/she remains married to the beneficiary spouse. Once the beneficiary spouse passes away, the grantor generally loses that benefit.
The new Florida law changes this, allowing grantor spouses to be added as trust beneficiaries upon the death of the original beneficiary spouse. This means the grantor spouse can receive distributions of principal and income from the SLAT even though those assets remain outside his/her estate and protected from creditors’ claims.
To take advantage of Florida’s amended law, a SLAT must be created and funded after June 30, 2022, and it must meet the following criteria:
- The beneficiary spouse must remain a beneficiary of the SLAT for their entire lifetime;
- The grantor spouse cannot be a SLAT beneficiary until after the death of the initial beneficiary spouse; and
- Transfers of assets from the grantor spouse to the SLAT must be considered completed gifts
Moreover, it behooves families and their advisors to be very precise when drafting SLATs in Florida to ensure that all the provisions included in the amended law are spelled out clearly.
About the Author: Rachel Kenney Rego, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where she works with entrepreneurs and high-net-worth families to develop and implement strategies for business, individual and estate tax efficiency. She can be reached at the CPA firm’s Boca Raton, Fla., office at (561) 361-2000 or info@bpbcpa.com.
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