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The SLAT Trap

Beware of income tax consequences of divorce.

Spousal lifetime access trusts (SLATs) are an increasingly common estate-planning tool and can serve a variety of important objectives for married clients. However, a grantor may not anticipate, much less welcome, the income tax consequences of a SLAT in the event of divorce. It’s important for estate-planning attorneys to take these issues into account in drafting SLATs or, if that’s not possible, for matrimonial attorneys to address them in divorce negotiations. 


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