Florida Banking December 2021 | January 2022

clients should avoid creating the SLATs for each other at the same time and/or with similar terms. As attractive as a SLAT may be, it is not for every wealthy family, and advisors and clients should work with qualified trust and estate planning attorneys, and CPAs in weighing the benefits and risks of implementing this estate tax strategy. A SLAT is generally better suited for those families with combined wealth that exceeds the current estate and gift tax exemption levels — currently $11.7 million for individuals and $23.4 million for married couples (assuming your client has not already used his or her full federal estate and gift tax exemption). The assets gifted to the SLAT can be individually owned by the donor spouse or titled in the donor spouse’s revocable trust; they cannot be jointly owned with the beneficiary spouse. In order to maximize the possible tax benefits of creating a SLAT, assets transferred to the SLAT, or the proceeds of funding assets, should be investments or other assets that are expected to appreciate over time, passing to future generations without incurring (under current law) additional federal gift or estate taxes. It is important to not overlook the assets a donor spouse may need in order to maintain their

accustomed standard of living, because the assets gifted to the SLAT are an irrevocable transfer. Since the SLAT is a grantor trust and the tax liability of the SLAT is paid by the donor spouse, advisors need to make sure that there are sufficient assets outside of the SLAT to satisfy these tax payments. There is no “step-up” in basis in a SLAT when the donor spouse or beneficiary spouse passes away, which means that if the trustees of the SLAT, (or the beneficiaries after the termination of the trust) later choose to liquidate the SLAT’s investments, such sales can trigger significant capital gains taxes. A SLAT may be a great tool to help your clients reduce their gift and estate tax liabilities, especially with the possibility of new tax laws and lower transfer tax exemption amounts. As with any tax or estate planning technique, this approach should be carefully and thoughtfully considered. Collaborative efforts with a team of qualified tax advisors and estate planning attorneys, working together for the clients’ unique financial position and family goals, are always recommended before any conclusive actions are taken. Karen is a Senior Vice President and Senior Trust Manager with Truist Wealth and has served as an FBA Trust and Education Committee Member since 2014.

At FNBB, we understand your needs and celebrate your achievements. We’re always available to discuss day-to-day challenges, plans for the future, or anything in between. Our industry is forever evolving, but together we can tackle new challenges and take advantage of new opportunities.

Supporting Community Banks

It is our privilege to serve you. Thank you for allowing us to be your trusted partner.

800.275.4222

SERVICE BEYOND COMPARISON

bankers-bank.com

WWW.FLORIDABANKERS.COM DECEMBER 2021 | JANUARY 2022 — 17