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Home » Estate Planning » Including a Spousal Lifetime Access Trust (SLAT) in Your Estate Plan

Including a Spousal Lifetime Access Trust (SLAT) in Your Estate Plan

Estate Planning

Spousal Lifetime Access Trust

When it comes to estate planning, married couples concerned about tax avoidance and financial security may wish to consider the benefits of a Spousal Lifetime Access Trust (SLAT). While you should always discuss changes to your estate plan with your estate planning attorney, it may be helpful to learn the mechanics and advantages of a SLAT. With that in mind, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss including a Spousal Lifetime Access Trust (SLAT) in your estate plan.

What Is a Spousal Access Lifetime Trust?

A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust established by one spouse (the Grantor) for the benefit of the other spouse (the beneficiary). This trust allows the beneficiary spouse to access the trust’s income and principal during their lifetime while removing the assets from the Grantor’s estate, helping to reduce the value of the Grantor’s taxable estate for the purpose of federal and/or state gift and estate taxes.

Should I Include a SLAT in My Estate Plan?

Incorporating a SLAT into your estate plan can provide substantial benefits if you are married and are concerned about the impact federal gift and estate taxes could have on your estate plan. As of 2024, the lifetime exemption shields $13.61 million from gift and estate taxes; however, the exemption is currently scheduled to revert to $5 million (adjusted for inflation) in 2026. For estates that exceed the lifetime exemption, as much as 40 percent of the non-exempt estate value could be lost to taxes. A SLAT is an estate planning tool that can help provide financial security to a surviving spouse while also decreasing an estate’s exposure to gift and estate taxes. Consider some key benefits a SLAT can provide:

  • Tax Avoidance: One of the primary benefits of a SLAT is its ability to reduce the taxable estate of the Grantor. Assets transferred into the trust are no longer considered part of the Grantor’s estate for estate tax purposes.
  • Access to Funds: If you are married, you undoubtedly worry about your spouse having sufficient income and resources to live comfortably if something happens to you. An important benefit of a SLAT is that unlike some other types of irrevocable trusts, the beneficiary of a SLAT does have access to the trust assets, providing financial security for a surviving spouse.
  • Asset Protection: Assets placed in a SLAT are generally protected from creditors and legal judgments, giving you peace of mind knowing that the trust’s assets are safeguarded from potential claims against your spouse (the beneficiary of the trust).
  • Lifetime Gifting: Now is an excellent time to talk to your estate planning attorney about incorporating a SLAT into your estate plan with the current lifetime exemption limit at $13.61 million and the knowledge that the limit will drop dramatically in 2026.

Are There Disadvantages to Creating a SLAT?

Like most estate planning tools and strategies, there are advantages and disadvantages to establishing a Spousal Lifetime Access Trust. Some potential disadvantages to consider include:

  • Irrevocability: Once established, a SLAT is irrevocable, meaning the Grantor (you) cannot change or revoke the trust. This permanence requires careful consideration and planning, as the Grantor must be comfortable with relinquishing control over the assets placed in the trust.
  • Loss of Direct Access: Although the beneficiary spouse has access to the trust’s assets, the Grantor does not. This lack of direct access means that the Grantor must ensure they have sufficient assets outside the trust to meet their own financial needs.
  • Impact on Marriage: A SLAT typically involves the transfer of significant assets to a trust for the benefit of one spouse while the other spouse loses control and access to those assets. Before establishing a SLAT, be sure that you and your spouse have a firm understanding of the purpose of the SLAT and the terms to be included in the trust.

Do You Have Additional Questions about Including a Spousal Lifetime Access Trust in Your Estate Plan?

For more information, please join us for an upcoming FREE seminar. If have additional questions about including a SLAT in your estate plan, contact the experienced Los Angeles estate plan attorneys at Schomer Estate & Wealth Advisorsby calling (310) 337-7696 to schedule an appointment.

Scott Schomer, Estate Planning Attorney
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