If preserving wealth for the next generation is important to your clients, the decisions you make today can have a lasting impact on their financial future.
A Spousal Lifetime Access Trust (SLAT) is one strategy that allows couples to move assets out of their taxable estate while still maintaining a degree of access during their lifetimes.
This guide breaks down how SLATs work, outlines key benefits, and explores factors to consider before including SLATs in your estate plan.
How SLATs Work
A Spousal Lifetime Access Trust (SLAT) allows one spouse to set aside assets for the benefit of the other spouse; often with children or grandchildren named as remainder beneficiaries. Here’s how the process typically works:
- One spouse (the grantor) funds the trust with assets they own individually, up to the federal estate and gift tax exemption of $15 million per person in 2026.1
- The beneficiary spouse can receive distributions of income and/or principal as needed, providing ongoing support for your household.
- When the trust ends after the surviving spouse passes away, any remaining assets pass to children, grandchildren, or other beneficiaries, often outside of the taxable estate.
Planning tip: Some couples create one SLAT for each spouse to maximize both lifetime exemptions, but the trusts must be structured carefully to avoid the IRS reciprocal trust doctrine.
The Benefits of SLATs
Affluent families often use SLATs to plan for the long term while still maintaining access to assets. Key benefits include:
- Estate tax efficiency. Assets transferred to a SLAT, and any future growth, are typically removed from the grantor’s taxable estate. Because SLATs are often structured as Intentionally Defective Grantor Trusts, the grantor can continue to pay the income taxes on trust earnings, further mitigating your potential estate tax burden over time.
- Indirect access through your spouse. While the grantor cannot receive distributions directly, your spouse can. That means the trust assets can still support your household and lifestyle.
- Asset protection. When structured properly, SLATs may provide a layer of protection from creditors or legal claims.
- Avoid probate. Spare your loved ones from the costs, stress and delays of settling your estate through the court.
- Legacy planning and control. Trust terms can provide the beneficiary spouse with a say in how and when assets pass to remainder beneficiaries at their death, ensuring your children are prepared to manage their inheritance.
Planning tip: Because SLAT assets typically don’t receive a step-up in basis at the second spouse’s death, careful consideration should be given when funding the SLAT, balancing the benefit of removing appreciation from the grantor’s estate and mitigating future capital gains taxes for heirs.
Important Factors to Consider
Because they’re complex and long-lasting, it’s important to work closely with an experienced estate planning team to make sure your SLAT is set up correctly. Here are a few key things to consider before moving forward:
- They’re permanent by design. Once assets are transferred into a SLAT, you generally can’t take them back.
- Life happens. Divorce or the unexpected death of a spouse can change how (or whether) the grantor is able to benefit indirectly from the trust. Your estate planning attorney can help incorporate protective provisions to address these risks and safeguard your interests.
- Don’t overlook cash flow. Be sure you maintain enough assets outside the trust to support your lifestyle, flexibility, and future goals.
- Where the trust is located matters. Asset protection rules and tax treatment vary by state, and the governing jurisdiction can have a meaningful impact on how the trust functions over time.
- Consider an independent trustee. An experienced corporate trustee has broader distribution flexibility with a SLAT, while a beneficiary spouse is generally limited to the health, education, maintenance, and support (HEMS) standard if they serve as trustee.
Planning tip: For long-term, multigenerational planning, a SLAT can be set up as a dynasty trust to keep assets invested and help reduce estate and generation-skipping taxes over time.
Frequently Asked Questions About SLATs
What assets can be placed in a SLAT?
A wide range of assets may be used, including cash, investment portfolios, interests in family businesses, and certain real estate.
Does the grantor spouse have any access to the trust?
The grantor cannot receive distributions directly. However, because the beneficiary spouse may receive distributions, the grantor spouse may indirectly benefit while both spouses are living.
What happens if the beneficiary spouse passes away?
After the beneficiary spouse’s death, the trust typically continues for children or other beneficiaries according to the trust’s terms, remaining outside the grantor’s taxable estate.
What happens if the spouses divorce?
Divorce can significantly affect access to the trust. Many SLATs include provisions that limit or terminate distributions to a former spouse, making this an important consideration during planning.
Are SLATs affected by future tax law changes?
One of the primary reasons families consider SLATs is to lock in current estate and gift tax exemptions. While future laws may change, assets properly transferred to a SLAT are generally protected from being pulled back into the estate.
Ready to Get Started?
A Spousal Lifetime Access Trust can be a tax-efficient way to support your loved ones and transfer wealth during your lifetime and after you pass.
The right structure can make all the difference, so it’s worth having a conversation with your advisory team to see whether a SLAT fits your goals. If you don’t have an advisor, connect with one in our growing national network of 6,000+ professionals.
Source
1 https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
