A spousal lifetime access trust (SLAT) is an estate planning tool created by one spouse (the grantor) to benefit the other spouse (the beneficiary). The grantor can indirectly benefit from the SLAT through distributions made to the beneficiary spouse. SLATs leverage generous tax exemptions, allowing the grantor to transfer assets and reduce future estate tax liabilities. Upon the beneficiary’s death, the remaining trust assets can then pass to future generations, such as the couple’s children or grandchildren.
The impending reduction of the federal estate tax exemption in 2026 has driven the growing popularity of spousal lifetime access trusts. The current lifetime estate and gift tax exemption is set to be nearly halved on January 1, 2026, creating a limited window to transfer larger amounts of wealth tax-free. Consequently, couples may consider establishing SLATs for each spouse to maximize the use of both exemptions before the reduction takes effect.
Proper Trust Management and Estate Planning to Ensure Your Family Benefits from Your Trust.
Careful planning is essential when creating a spousal lifetime access trust to avoid the “reciprocal trust doctrine,” where if not appropriately set up, the IRS can negate the desired benefits of a SLAT trust. Consulting with an experienced, and qualified estate planning attorney and trust administration team like Altruist™ is crucial to ensuring your plan achieves your wishes for your estate. Altruist™ has extensive experience working with clients to develop and manage SLATs, and looks forward to working with you in identifying the right trust for your needs.