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scrabbleAs CPAs, estate planners, and individuals alike gain a better understanding of the implications of last year’s changes to tax law, new strategies are forming to take advantage of current laws to protect assets. Here a couple of lesser-known trusts that can help you protect your estate from unnecessary taxation—DAPTs and SLATs.

Domestic Asset-Protection Trusts (DAPTs) are irrevocable self-settled trusts that can protect assets from creditors while still allowing the settlor to be a discretionary beneficiary.

Spousal Lifetime Access Trusts (SLATs) are irrevocable trusts established by one spouse during his or her lifetime to benefit the other spouse. These can be an effective way to reduce estate taxes by using the gift tax exemption.

DAPTs and SLATs can open up beneficial planning opportunities, but there’s a catch: only 17 states permit DAPTs, and New York isn’t one of them. The workaround? Set up a DAPT in a “trust-friendly” state. This is typically done through an institution. Alaska, Delaware, Nevada, and South Dakota are generally considered to be the most popular states to form trusts, however your estate planning attorney can help you choose the best trust and course of action given your financial situation and objectives.

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