Joe Elsasser, CFP

Description

A SLAT is generally a variation of a credit shelter bypass trust. It is common for a credit shelter bypass trust created at death to provide the surviving spouse with a right to distributions based on an ascertainable standard of health, education, maintenance, and support (HEMS). However, if your SLAT has a HEMS provision giving your spouse access to the trust while you are alive, it may cause problems for the SLAT. Such an interest could be treated as the right to discharge your legal obligation to provide support to your spouse, which would cause inclusion of the SLAT in your gross estate for estate tax purposes as an interest retained for your life. But, if your spouse's interest is limited to distributions at the sole discretion of an independent trustee (perhaps with a HEMS provision for your spouse after your death), this problem should not arise.

We provide comprehensive financial planning services, helping you maximize the inevitable tradeoffs between social insurance programs like Social Security and Medicare, commercial insurance options, such as long term care, life insurance and annuities, investment options such as stocks, bonds, mutual funds, exchange traded funds and a variety of alternative investment options in light of tax and estate planning concerns.

It's common to discuss desired annual retirement income as a percentage of your current income. Depending on who you're talking to, that percentage could be anywhere from 60 to 90 percent, or even more. The appeal of this approach lies in its simplicity, and the fact that there's a fairly common-sense analysis underlying it: Your current income sustains your present lifestyle, so taking that income and reducing it by a specific percentage to reflect the fact that there will be certain expenses you'll no longer be liable for (e.g., payroll taxes) will, theoretically, allow you to sustain your current lifestyle. The problem with this approach is that it doesn't account for your specific situation. If you intend to travel extensively in retirement, for example, you might easily need 100 percent (or more) of your current income to get by. It's fine to use a percentage of your current income as a benchmark, but it's worth going through all of your current expenses in detail, and really thinking about how those expenses will change over time as you transition into retirement.

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