The most widely used advanced estate planning structure for married couples — and the one that asks the least of you in exchange.
A Spousal Lifetime Access Trust is an irrevocable trust you create for the benefit of your spouse and descendants. The transfer is a completed gift, which means it uses part of your lifetime gift and estate tax exemption — and in exchange, the assets you put in, along with every dollar they grow from that day forward, sit permanently outside your taxable estate.
That last point is what people underestimate. If you transfer a business interest worth $5 million and it is worth $30 million when you die, the entire $30 million is outside your estate. You used $5 million of exemption to shelter $30 million.
One rule is absolute: you cannot be a beneficiary of your own SLAT. Your spouse and descendants can be. You cannot. Your access to the money runs through your spouse, which is exactly why the structure carries the name it does.
A SLAT is normally drafted as a grantor trust, which means you continue to pay the income tax on everything the trust earns even though the assets are no longer yours.
Clients hear that and assume it is a defect. It is the best feature in the structure. The trust compounds without ever being reduced by a tax bill, and the taxes you pay on its behalf are, in substance, an additional transfer to your family every single year — one that uses no exemption, triggers no gift tax, and requires no further paperwork. Over fifteen or twenty years, that quiet annual subsidy is often worth more than the original gift.
This is where most conversations actually happen. Clients want to know what happens when they need the money.
Access is indirect, and for most couples it turns out to be enough. The trustee can distribute to your spouse and to your children. If the trust is paying for tuition, cars, health insurance, weddings, and a first home, that is money leaving the trust instead of leaving your pocket — and the practical effect on your household is close to identical.
When a genuine need arises, there is usually a solution that does not unwind the planning. Suppose a million dollars is needed for an apartment:
A good trustee reaches for the third option first. That is part of what you are selecting for when you appoint one.
SLATs are typically drafted as dynasty trusts, with generation-skipping transfer tax exemption allocated at funding. Done properly, the trust can serve children, grandchildren, and beyond without the assets being taxed again as they pass down each generation. If you are going to use exemption at all, using it on a structure with that reach is ordinarily the better trade.
The marriage. Your access depends on your spouse. Divorce closes it off, and so does your spouse dying before you. Neither risk is a reason to avoid a SLAT, but both are reasons to size the gift so that what remains outside the trust would still support you if the worst happened.
The reciprocal trust doctrine. When both spouses create SLATs for each other, the IRS can treat them as though each created a trust for themselves — which would undo both. Avoiding that requires real, substantive differences between the two trusts: different funding dates, different assets, different beneficiary classes, different distribution standards, different trustees. This is drafting work, not a formality.
Your spouse as trustee. Permissible, and we generally advise against it. An independent trustee protects the structure precisely when it is under the most pressure.
Unlike the other two structures on this site, a SLAT does not require an out-of-state or professional trustee. There is no annual trustee fee to carry and no jurisdiction to maintain. For a client who wants the estate tax benefit without ongoing cost and administration, that difference matters.
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Which structure fits depends on facts no article can guess at. A conversation costs nothing and usually settles the question quickly.
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