Spousal Lifetime Access Trust (SLAT)

Spousal Lifetime Access Trust (SLAT)

A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust established by one spouse for the benefit of the other spouse. This trust allows the grantor to remove assets from their taxable estate while still providing access to income and principal for the beneficiary spouse during their lifetime.

The primary purpose of a SLAT is to leverage the gift tax exemption and potentially shield assets from estate taxes upon the death of the grantor. The grantor can also benefit indirectly since the beneficiary spouse can access the trust’s income and assets. However, once the trust is created, the grantor relinquishes direct control over the assets, and the trust cannot be altered or revoked without the consent of the beneficiary.

For example, if Spouse A sets up a SLAT and transfers $1 million worth of investments into the trust, Spouse B can receive income generated from those investments. Upon Spouse A’s death, the assets in the SLAT will not be included in Spouse A’s estate, potentially reducing estate taxes.