Spousal Lifetime Access Trusts (SLATs) can be beneficial in providing for a surviving spouse.
For couples with significant assets, the risk of high estate taxes is greater than for the average American.
There is often a tension between access to assets and preservation of wealth.
For those seeking a balance between these two goals, a Spousal Lifetime Access Trust (SLAT) can be a wise estate-planning move.
Why?
This instrument provides both protection and flexibility.
Wealthy couples can benefit from Spousal Lifetime Access Trusts.
SLATs fall under the category of irrevocable trusts in estate planning.
How do they work?
One spouse sets up the trust with an experienced estate planning attorney to benefit the other spouse.
This spouse who creates the SLAT is called the trustmaker (also known as the grantor, settlor, or trustor).
After the SLAT is set up, the trustmaker can transfer assets into the trust.
These assets can include anything from business interests to real estate and investments.
When these assets are used to fund SLATs, they are removed from the taxable estate.
The spouse who is the trust beneficiary can receive income and distributions from the trust over his or her lifetime.
SLATs allow assets to be accessed by the surviving spouse in a tax-efficient manner.
Couples can reduce their taxable estate while retaining resources for their own expenses and financial needs.
SLATs protect assets from future estate taxes.
Although the federal estate tax threshold is currently at a historically high level, couples can preemptively protect their wealth in case future tax laws are reduced.
For example, back when I began my career as an estate planning attorney in 1993, the threshold was $600,000!
In addition to tax benefits, SLATs also provide asset protection.
After assets are transferred to an irrevocable living trust, they are shielded from the creditors of the trustmaker or the beneficiary.
Such protections make SLATs particularly attractive to families with significant wealth and business owners.
Often, these trusts can provide income to the beneficiary spouse, allowing families to benefit from the assets while simultaneously removing them from the trustmaker's estate.
Although SLATs are powerful estate planning instruments, they must be carefully crafted by an experienced estate planning attorney.
The irrevocable nature of the trust means assets transferred to the trust cannot be returned to the ownership of the trustmaker.
Couples should ensure they have enough liquidity to maintain their standard of living without reliance on trust assets.
Spouses cannot simply create identical trusts for each other, even though that is tempting.
Why?
Doing so can trigger the "reciprocal trust doctrine."
What is the "reciprocal trust doctrine"?
It is an IRS rule that allows tax benefits to be invalidated if the SLATs are too similar.
For SLATs to work for both spouses, they must have meaningful differences.
An experienced estate planning attorney can structure each trust uniquely and use distinct timing, funding sources, or distribution terms to align with IRS standards.
SLATs are most beneficial for couples with large estates who want to take advantage of the current high federal tax exemptions.
They can be helpful for those who want to preserve wealth while also providing some financial support to their spouse.
SLATs can also complement other estate planning instruments, such as charitable trusts or irrevocable life insurance trusts.
By using multiple estate planning instruments, couples can provide optimal asset protection while funding philanthropic and personal goals.
SLATs should not be thrown together without thought.
Because they are permanent tools, they should be used strategically after considering goals and options.
The trustmaker will not be able to access the assets after they have been transferred to the trust.
This possible drawback is also why they can protect against financial mismanagement, legal claims, and estate taxes.
When couples choose SLATs after careful consideration, they often find peace of mind about the financial security of the surviving spouse.
SLATs both provide income distributions to spousal beneficiaries and reduce the taxable estate of a couple.
Creating a Spousal Lifetime Access Trust before any potential future decrease in the estate tax exemption can preserve long-term savings.
SLATs must be drafted by an experienced estate planning attorney to avoid negating trust benefits as a result of the reciprocal trust doctrine.
While SLATs are not the best option for all couples, they can provide the benefits of preserving wealth and providing for loved ones in the right circumstances.
This post is for informational purposes only and does not provide legal advice. You should consult an attorney for advice on any specific issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
Reference: Forbes (Sep. 30, 2025) "Spousal Lifetime Access Trusts: A Strategic Estate Planning Tool"
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