Spousal Lifetime Access Trusts
A Strategic Estate Planning Tool for Taxable Estates
By Royce Ramey, CFA®, Co-Chief Executive Officer, Chief Investment Officer
As an advisor working with ultra-high-net-worth families, I am frequently asked, “What strategy do the wealthy use most often in managing estate taxes?”
Even while lifetime exemptions have remained high since the first Trump tax cuts in 2017 and are now made permanent with the passage of the One Big Beautiful Bill, ultra-high-net-worth families are increasingly turning to advanced planning strategies to preserve wealth across generations. One such strategy is the spousal lifetime access trust (SLAT). This powerful and flexible tool allows a donor spouse to essentially accelerate a gift typically made at their passing by making the gift in trust to their spouse during their lifetime.
What is a SLAT?
A SLAT is an irrevocable trust established by one spouse (the “grantor”) for the benefit of the other spouse (the “beneficiary”). The grantor transfers separate property assets into the SLAT, using their lifetime gift tax exemption to place the assets outside the grantor’s estate. Once funded, the assets in the SLAT are removed from the grantor’s taxable estate, which means any future appreciation also escapes estate taxation.
The beneficiary spouse can receive distributions from the SLAT, providing a measure of financial flexibility. This access can be particularly valuable if the couple’s financial circumstances change or if liquidity is needed.
Key Features of A SLAT
- Irrevocable Structure: Once assets are transferred into the SLAT, the grantor cannot reclaim them. This permanence is what enables the estate tax benefits.
- Spousal Access: The beneficiary spouse can receive income or principal distributions, which may indirectly benefit the grantor spouse as long as the couple remains married.
- Gift Tax Exemption Utilization: SLATs are often used to lock in the current federal gift and estate tax exemption which, in 2025, is $13.99 million, and beginning in 2026 will be $15 million, adjusted for inflation annually.
- Generation-Skipping Planning: SLATs can be structured to benefit children and grandchildren, potentially leveraging the generation-skipping transfer (GST) tax exemption.
- Creditor Protection: Assets in a properly structured SLAT may be shielded from creditors of both the grantor and beneficiary spouse.
Why SLATs Are Valuable for Families with Taxable Estates
A top benefit of a SLAT is to reduce estate taxes. By transferring appreciating assets into a SLAT, families can move future growth outside of their taxable estate, which is especially important for families with estates that exceed the federal exemption or for those who live in states with separate estate taxes. SLATs also provide a combination of flexibility and access. Because the beneficiary spouse may receive distributions of income or principal, the grantor keeps some access to the assets, addressing the concern of overcommitting assets to an irrevocable trust structure, traditionally for the benefit of children.
SLATs can also help protect family wealth from creditors and lawsuits. When structured right, the trust creates separation between the assets and potential litigation. For families focused on multigenerational wealth transfer, SLATs can be designed to benefit not only a spouse but also children and grandchildren, supporting long-term legacy planning and dynasty trust structures.
Considerations And Risks
Like most sophisticated wealth management tools, SLATs can be complex and should be carefully constructed to avoid unintended consequences. One important consideration is the reciprocal trust doctrine: If both spouses create similar SLATs for each other, the IRS may treat the trusts as if each spouse retained control, defeating the estate tax benefit.
Divorce or the death of the beneficiary spouse also poses risks, as the grantor could lose indirect access to the trust assets. For this reason, it is important to fund a SLAT only with assets that the grantor can afford to part with permanently.
There are also income tax considerations, since SLATs are typically structured as grantor trusts, meaning the grantor remains responsible for paying the income taxes. State law can also affect planning regarding marital property, asset protection and trust taxation.
Finally, because assets transferred to a SLAT do not receive a step-up in basis at the grantor’s death, heirs may face capital gains taxes when those assets are sold. However, those assets are not subject to estate taxes (currently at 40%) if the GST exemption is used.
Ideal Candidates for a Spousal Lifetime Access Trust
SLATs are not a universal solution, but they can be a powerful option for certain families. If your net worth exceeds $30 million, for example, or if you hold a highly appreciating asset such as a fast-growing business, now may be the time to explore this strategy. In these cases, transferring future growth outside of your taxable estate can reduce estate tax exposure and preserve more wealth for future generations.
These trusts require very careful structuring and are highly nuanced. No two families’ situations are alike, which is why it is recommended that implementation not happen without professional guidance. Families considering SLATs are advised to work with their estate planning attorney, tax advisor, wealth manager or family office to evaluate how this type of trust could fit into their legacy and liquidity planning.
How to Get Started
For ultra-high-net-worth families, a SLAT can be a sophisticated yet flexible estate planning tool to help reduce estate taxes, protect assets and maintain access to wealth.
Getting started begins with evaluating whether your projected estate is likely to exceed federal or state exemptions and identifying which assets make the most sense to transfer. Working with an estate planning attorney and qualified wealth advisor with estate planning expertise can be key to determining how distributions should be structured for the beneficiary spouse and to make sure the SLAT integrates seamlessly with your long-term family goals.
When thoughtfully designed and coordinated with broader financial and family goals, a SLAT can be a cornerstone of multigenerational wealth preservation.
This article originally appeared on Forbes.com.
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