Why Business Owners Should Consider a SLAT After their sale
Selling a business is one of the most significant milestones in an entrepreneur’s life. It represents years of dedication, risk-taking, and strategic decision-making. But while the sale itself is often the focus, what happens after the liquidity event is just as critical. Without proper planning, the proceeds can be exposed to estate taxes, creditors, and unforeseen risks that erode the value of the transaction.
At Lomba, P.A., we guide sellers through this crucial stage by leveraging one of the most effective estate planning tools available: the Spousal Lifetime Access Trust (SLAT).
What Is a SLAT?
A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust established by one spouse for the benefit of the other. It allows the grantor to move assets—such as business sale proceeds—outside of their taxable estate, while still preserving indirect access through the beneficiary spouse.
In simple terms, a SLAT is a way to protect wealth, reduce tax exposure, and maintain flexibility for the family.
Why SLATs Matter After a Liquidity Event
1. Estate Tax Efficiency
Liquidity events often push owners into significant estate tax exposure. By transferring proceeds into a SLAT, those assets are removed from the taxable estate. This can translate into millions of dollars in tax savings, ensuring more of the sale proceeds remain with the family rather than the IRS.
2. Asset Protection
A sudden influx of liquidity can attract unwanted attention—from creditors, lawsuits, or opportunistic claims. A SLAT provides a protective shield, insulating wealth from external threats and preserving financial security.
3. Family Access & Flexibility
Unlike many irrevocable trusts, a SLAT allows the beneficiary spouse to access funds for family needs. This means the family can benefit from the liquidity while the assets remain protected. It’s a balance of security and usability.
4. Legacy Planning
The sale of a business is not just about today—it’s about tomorrow. A SLAT ensures that wealth is preserved for future generations, aligning with long-term estate and legacy goals. It transforms a one-time liquidity event into a lasting family asset.
How SLATs Fit Into the Bigger Picture
A liquidity event is often the largest financial transaction of a business owner’s life. Structuring the aftermath is just as important as negotiating the deal itself. A SLAT is not a one-size-fits-all solution—it must be integrated into a broader estate and asset protection strategy.
At Lomba, P.A., we combine SLATs with layered entity structures, trusts, and compliance-driven planning to ensure that every dollar of value is maximized and safeguarded.
Case Example
Consider a business owner who sells their company for $15 million. Without planning, their estate could face significant tax exposure, potentially reducing the net value passed to heirs by millions. By establishing a SLAT, the owner moves a substantial portion of the proceeds outside of their taxable estate, protects the assets from creditors, and ensures their spouse can access funds for family needs. The result: long-term preservation of wealth and peace of mind.
Final Thought
Smart exits aren’t just about valuation—they’re about preservation. By integrating a SLAT into post-sale planning, business owners can transform a liquidity event into a lasting legacy.