Fair Lawn Attorney Advises on Spousal Lifetime Asset Trusts 

North Jersey lawyer helps married couples protect wealth and avoid taxes

A spousal lifetime asset trust (SLAT) can help you reduce tax exposure while protecting your husband or wife, but the rules governing their creation and effectiveness are complicated. At The Paton Law Firm LLC in Fair Lawn, I can explain how a spousal lifetime trust might help you accomplish your objectives. Should you choose to go forward, I will help you create a SLAT suited to your needs.

What is a SLAT and why use it?

A spousal lifetime asset trust is a type of irrevocable trust composed of property provided by one spouse for the benefit of the other. Upon the second spouse’s death, remaining assets are distributed to designated beneficiaries. A SLAT has two primary benefits. The donor spouse may indirectly benefit from the distributions if they’re used for the joint benefit of both spouses. Moreover, SLAT assets are non-taxable until distributed. As a seasoned trusts and estates attorney, I can explain these trusts in more detail and help you decide if one is right for you.

Tax benefits and wealth protection

SLATs help spouses whose total assets might exceed the federal exemption amount reduce the size of their estates in order to curtail or eliminate tax liability. The individual exemption is adjusted annually and is approximately $14 million for 2025 (this can be effectively doubled if you are married). However, without Congressional action, this amount could drop sharply in 2026. This means that you might want to consider a SLAT now to take advantage of the current exemption level. SLAT assets are also protected against seizure from creditors. I can review your situation to assess whether establishing a SLAT will be useful. 

Key features and requirements of SLATs

When you set up a SLAT, you need to:

• Appoint a trustee to administer and distribute the trust assets
• Make your spouse the trust’s sole beneficiary during their lifetime
• Appoint remainder beneficiaries, to whom the trustee will distribute all of the remaining trust assets upon your spouse’s death

It’s important to structure your SLAT so that it complies with applicable tax laws and other regulations. Otherwise, you might not be able to reap its benefits. As an experienced elder law and estate planning attorney, I can ensure that your trust satisfied the necessary requirements. 

Should you create a SLAT?

SLATs are particularly useful for high net-worth couples in stable marriages who are looking to preserve family wealth. However, it’s important to coordinate with your spouse to avoid application of the reciprocal trust doctrine. Under this doctrine, if a married couple creates SLATs for each other’s benefit, they could lose the tax benefit because they the trusts are too interrelated and leave the spouses in essentially the same position as if they had no SLATs. Conditions that favor the creation of a SLAT include the following:

• One spouse has significantly greater assets than the other spouse and can afford to fund the trust.
• Both spouses put their assets into trusts that are created at different times and are materially different in size, legal provisions and characteristics.

You can rely on my counsel about the effectiveness and enforceability of your proposed SLAT. 

Potential risks and limitations of SLATs

SLATs come with other risks, due to their irrevocable nature and your loss of direct control over their assets. If the beneficiary spouse dies before the grantor spouse, or the couple divorces, the grantor will no longer benefit, even indirectly, from the trust assets. My firm works to outline potential risks and consequences so that you can evaluate whether the aligns with your long-term goals.

Contact a North Jersey trusts and estates attorney for a free consultation

The Paton Law Firm LLC assists New Jersey residents who are considering establishing a SLAT as part of their overall estate planning strategy. Please call 201-470-4801 or contact me online to schedule a free initial consultation at my Fair Lawn office.