Under current tax law, an individual can make lifetime gifts and/or bequests upon death totaling $12.92 million without triggering gift or estate tax. A married couple can transfer nearly $26 million to heirs (or to trusts for their benefit) without incurring any transfer tax liability. Gifts or bequests above this exempt amount trigger federal transfer taxes at rates up to 40%. Barring congressional action, this exemption will be reduced to around $6 million per person in January of 2026. In order to lock in the benefit of the current exemption, large lifetime gifts may be advisable.
Lifetime gifts may be made directly to family members or to one or more trusts for their benefit. A Spousal Lifetime Access Trust (“SLAT”) is a popular vehicle for making significant lifetime gifts. A SLAT is typically structured as a trust for descendants that includes one’s spouse as a permissible beneficiary. The assets transferred to the SLAT are removed from an individual’s taxable estate, but in the unexpected event that the household needs funds, the spouse can access the funds as a beneficiary. As an added benefit, creating a SLAT in a state without state income tax may eliminate the payment of the dreaded SALT (state and local taxes) on future sales of assets.
CLICK HERE to learn more about SLATS, or contact Naim Bulbulia directly at nbulbulia@hdrbb.com, to discuss setting up a SLAT or any other estate planning techniques that interest you.
