There is one common problem that people face when setting up a trust. They need to decide whether they want the trust to help protect their assets from the estate taxes or unrestricted access to assets placed in the trust during their lifetimes. There are many different types of trusts that can be created. However, most require some level of tradeoff between estate tax minimization and access to the trust assets.
On the other hand, there is a type of trust that seemingly offers the best of both worlds. What is it called? A spousal lifetime access trust (SLAT) recently discussed in the Wills, Trusts & Estates Prof Blog in "Exploring the Spousal Lifetime Access Trust."
A SLAT is an irrevocable trust that one spouse, the settlor-spouse, creates for the benefit of the other spouse, the beneficiary-spouse. Through use of the gift tax exemption, the beneficiary-spouse can access trust assets, including income, during his or her lifetime. The settlor-spouse might then have access to funds through the beneficiary-spouse. Children of the beneficiary-spouse can also be named as beneficiaries.
There are potential drawbacks for the settlor-spouse with a SLAT. If the couple gets divorced, the settlor-spouse will likely lose access to trust assets. The same thing can happen, if the beneficiary-spouse passes away first depending on other estate planning decisions that were made.
Reference: Wills, Trusts & Estates Prof Blog (April 16, 2018) "Exploring the Spousal Lifetime Access Trust."