Spousal Lifetime Access Trusts can Protect Your Partner When You're Gone

For couples with significant assets, planning for the future is necessary to ensure financial security for the surviving spouse while minimizing tax exposure. A Spousal Lifetime Access Trust, or SLAT, offers an effective way to achieve both goals. Combining long-term protection with ongoing access to funds helps preserve family wealth while maintaining flexibility.

Understanding Spousal Lifetime Access Trusts

A Spousal Lifetime Access Trust is an irrevocable trust created by one spouse for the benefit of the other. The grantor transfers assets, such as investments, real estate, or business interests, into the trust, thereby removing them from their taxable estate. The non-grantor spouse can then receive income or distributions from the trust during their lifetime.

This arrangement provides a balance between tax efficiency and practical access. It allows couples to reduce the size of their taxable estate while keeping resources available should unexpected expenses or financial changes arise.

How SLATs Protect Wealth

One of the main advantages of an SLAT is its ability to shield assets from future estate taxes. With current federal exemption limits set at historically high levels, couples can transfer substantial wealth now and lock in those benefits before potential tax law changes reduce the threshold.

The trust also serves as a form of asset protection. Once transferred, the assets generally cannot be reached by the grantor's or the beneficiary's creditors. This makes SLATs appealing to business owners and high-net-worth families seeking long-term security.

In many cases, the trust can also distribute income to the beneficiary spouse, ensuring that the family continues to benefit from the assets even though they are no longer part of the grantor's estate.

Key Structural Considerations

While powerful, SLATs require careful design. Because they are irrevocable, the grantor cannot reclaim the assets after transferring them. Couples must ensure that they retain sufficient liquidity and income outside the trust to maintain their standard of living.

If both spouses create SLATs for each other, the trusts must differ meaningfully to avoid triggering the "reciprocal trust doctrine." This IRS rule can invalidate tax benefits if two trusts are too similar, effectively treating each spouse as if they never transferred the assets in the first place.

Working with an experienced estate planning attorney helps ensure that each trust is structured uniquely using different funding sources, timing, or distribution terms to comply with IRS standards.

When to Consider a SLAT

A Spousal Lifetime Access Trust is particularly beneficial for couples with taxable estates who want to take advantage of the current high federal estate tax exemptions, which are set to increase from $13.99 million per person to $15 million for 2026. It's also ideal for individuals who wish to preserve family wealth without cutting off financial flexibility for their spouse.

In addition, SLATs can complement other estate planning tools, such as irrevocable life insurance trusts or charitable trusts. By layering strategies, couples can maximize protection and tailor distributions to meet both personal and philanthropic goals.

Balancing Flexibility and Finality

Because SLATs are permanent, they require both foresight and discipline. Once assets move into the trust, they are beyond the grantor's reach. However, that finality is what gives them their power. The trust ensures that estate taxes, legal claims, or financial mismanagement will not erode assets.

Couples who thoughtfully design SLATs often find peace of mind knowing that their partner will be cared for, no matter what happens.

Key Takeaways

• A SLAT combines access and protection: It removes assets from the taxable estate, while still allowing the beneficiary spouse to use them.
• Timing is crucial: Establishing an SLAT before estate tax exemptions decrease can preserve long-term savings.
• Proper drafting avoids tax pitfalls: Distinct terms prevent the reciprocal trust doctrine from undoing benefits.
• Asset protection and flexibility coexist: SLATs safeguard wealth, while maintaining financial support for a surviving spouse.

A Spousal Lifetime Access Trust can be a powerful tool for couples seeking to protect their partner and preserve family wealth while minimizing estate taxes. At The Werner Law Firm, our estate planning attorneys help clients design SLATs that balance long-term protection with practical access, ensuring your spouse is cared for without compromising your overall financial strategy. With careful planning, you can provide security today while safeguarding your legacy for the future.

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Reference: Forbes (Sep. 30, 2025) "Spousal Lifetime Access Trusts: A Strategic Estate Planning Tool"