Estate planning is a concept that can benefit most individuals, ensuring the tax-efficient transfer of wealth, providing lifetime asset protection, and helping with overcoming the complexities of probate. A commonly applied estate planning mechanism is a trust, and one type of this vehicle that married couples may find useful is the spousal lifetime access trust (SLAT). Learn about spousal lifetime access trusts, including how SLATs work and their benefits, and find out how a knowledgeable Florida/Minnesota estate planning lawyer might assist individuals with their estate plans; discuss your legal queries with Roulet Law Firm, P.A. today by calling our Florida branch at (941) 909-4644 or our Minnesota location at (763) 420-5087 or you can fill out the contact form on this page and a member of our team will reach out to schedule your consultation.
What Are Spousal Lifetime Access Trusts?
SLATs refer to irrevocable trusts created by individuals to benefit their spouses. When the party creating the trust (the grantor) transfers assets to the SLAT, they lose the ability to manage or use those assets. This action removes these assets from the grantor’s taxable estate, and the other spouse acquires access to these assets in accordance with the terms stipulated in the trust documentation. Often, the trust allows for immediate access, meaning the spouse can instantly access any funds within the SLAT during the grantor’s lifetime.
What Are the Benefits of SLATs?
While a grantor loses control of the assets within a SLAT, provided they share finances with their spouse, they can retain indirect benefits of the trust’s assets (such as any income generated) alongside the other protections afforded by a trust. SLATs offer users some other noteworthy benefits, as described below.
Taxable Estate ExclusiTon
When a grantor passes away, any assets placed in a SLAT do not form part of the grantor’s (or their spouse’s) gross estate. Because of this, neither party has to pay estate taxes on the SLAT’s funds.
SLAT Appreciation Avoids Estate Tax
In an ideal world, any assets transferred to a SLAT will increase in value over time. If this occurs, the appreciation does not form part of the grantor’s taxable estate. By contrast, if the grantor chooses to not establish a SLAT and keep these appreciating assets until they pass away, the property and increase in value would incur estate taxes; in addition to SLATs, any type of irrevocable trust can help individuals pass down appreciating assets that do not incur estate taxes to their beneficiaries.
Creditor Protection
Assets moved into a SLAT are no longer legally owned by the grantor. Provided that the trust documentation is carefully drafted, this can prevent both the creditors of the grantor and spouse from making claims on the trust’s assets.
Estate Tax Exemption
Perhaps the most significant advantage of a SLAT is the ability to utilize the federal estate tax exemption, currently at an all-time high of $13.99 million as announced by the Internal Revenue Service (IRS). This exemption has grown significantly since the introduction of the Tax Cuts and Jobs Act in 2017, a piece of legislation that reformed federal taxes for businesses and individuals according to the Tax Foundation, where the exemption was $5.49 million, but without intervention from Congress, this exemption is likely to fall back to $5.49 million in 2026.
As with any type of irrevocable trust, grantors can contribute funds without paying estate or gift taxes below the estate tax exemption threshold, meaning, in 2025, a grantor could pay up to $13.99 million into a SLAT tax-free. Essentially, a SLAT enables grantors to increase the use of this exemption, and if they use it now (compared to a later date when the exemption could be lower), they are more likely to benefit from a higher exemption threshold. Explore the mechanics of SLATs in greater detail, and discover how Roulet Law Firm, P.A. can help people establish spousal lifetime access trusts and other estate planning mechanisms by reaching out to our firm and speaking to an experienced Minnesota/Florida estate planning attorney.
How Does a Spousal Lifetime Access Trust Work?
When moving assets to a SLAT, the grantor makes the transfer in their name and reports this as a taxable gift when completing a tax return; so long as the transfer falls within the gift tax exemption threshold, the grantor would owe no gift tax on this transfer. A grantor can transfer virtually any asset to a SLAT, such as cash, real estate, marketable securities, life insurance, and business interests. However, a grantor should not fund a SLAT using jointly owned assets, and they must obtain an appraisal of non-marketable property transferred to a SLAT (with the value reflecting the transfer date) to meet reporting requirements.
The grantor gifts assets to the SLAT and reports this on their tax return. Then, the grantor’s spouse may request principal or income distributions, which could also benefit the grantor indirectly. Upon the death of the grantor’s spouse, the SLAT ends, and any outstanding assets within the trust transfer to the remainder beneficiaries outlined in the trust documentation; spouses with significant assets may wish to set up one SLAT each, as described below.
Say, for instance, that two retired spouses have separate and jointly owned assets amounting to $30 million, which could increase in value during their lifetime. In this scenario, they could both establish SLATs that benefit their family and utilize each spouse’s $13.99 million (2025) exemption ($27.98 million total), meaning they would pay no gift or estate tax on these funds, in addition to any future income and appreciation, while also still indirectly benefiting from these assets. Alongside relying on SLAT distributions, the spouses could use their outstanding $2.02 million of shared assets to fund their ongoing living expenses.
What Are the Disadvantages of a Spousal Lifetime Access Trust?
One notable drawback of a SLAT is that the grantor relinquishes all asset access and control, and due to the inability to appoint themselves as a trustee, the grantor has no say regarding when and how to make distributions to the spouse. While the grantor does have the ability to replace and remove the SLAT’s trustee, the new trustee may not necessarily agree with the grantor’s views concerning the trust. Additionally, a SLAT’s tax benefits diminish if the grantor’s spouse receives substantial trust distributions before the trust’s assets can appreciate, reducing the possible funds left to the trust’s remainder beneficiaries, which means SLATs may not be appropriate for spouses who are looking to rely on the SLAT’s distributions to fund their living expenses.
The indirect benefit available to the grantor from making distributions from the SLAT to the grantor’s spouse disappears in the event of the couple divorcing or the grantor’s spouse dying prematurely, highlighting the importance of a couple considering how their relationship may change as they age and understanding how a spousal lifetime access trust aligns with their legacy planning goals. Furthermore, the flexibility provided to the grantor’s spouse per the trust’s terms could become an issue if the views of the grantor’s spouse concerning the use of the SLAT no longer align with those of the grantor. While SLATs are irrevocable, a couple’s financial and personal circumstances can change, potentially leading to the grantor regretting their decision regarding the trust’s structure.
What Assets Are Best To Fund a SLAT?
When moving assets to a SLAT, the grantor makes the transfer in their name and reports this as a taxable gift when completing a tax return; so long as the transfer falls within the gift tax exemption threshold, the grantor would owe no gift tax on this transfer. A grantor can transfer virtually any asset to a SLAT, such as cash, real estate, marketable securities, life insurance, and business interests. However, a grantor should not fund a SLAT using jointly owned assets, and they must obtain an appraisal of non-marketable property transferred to a SLAT (with the value reflecting the transfer date) to meet reporting requirements.
Discuss Your Queries With a Knowledgeable Florida/Minnesota Estate Planning Attorney
Due to the potential of a sharp reduction in the federal estate and gift tax exemption in 2026, many individuals may want to promptly establish a SLAT, which is one estate planning tool that can take advantage of the currently high exemption. SLATs are helpful estate planning mechanisms that, if correctly structured, can help benefit spouses, strategically remove assets from a person’s taxable estate, and provide estate tax and creditor protection for future generations. Individuals considering spousal lifetime access trusts, and other legacy planning tools, might want to think about discussing their legal needs with a Florida/Minnesota estate planning lawyer; contact Roulet Law Firm, P.A. at (941) 909-4644 to reach their Florida office or (763) 420-5087 for their Minnesota site to gain assistance with developing a tailored and legally compliant estate plan or you can fill out the contact form on this page and a member of our team will reach out to schedule your consultation.
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