What is a Spousal Lifetime Access Trust or SLAT?

A Spousal Lifetime Access Trust (SLAT) is a specially designed irrevocable trust for married clients. When properly structured, the trust keeps assets including life insurance proceeds outside of both spouses’ estate, while allowing the trustee to access the trust’s assets and policy’s cash value for the benefit of the non-grantor spouse. After the non-grantor spouse’s death, the trust property can then be distributed to other beneficiaries such as children or grandchildren.

How does a SLAT work?

Diagram of how a Spousal Lifetime Access Trust (SLAT) works

Download the SLAT Strategy Sheet

What are the Possible Advantages of a SLAT?

Having Your Cake & Eating it Too

This type of trust has become popular in large part because it allows a client to do key planning, while still providing flexibility and access to the assets in the trust. Yet, the trust partitions the assets out of the estate for estate tax purposes.

Donor Peace of Mind

Knowing that gifts to the trust could possibly be recovered if circumstances change can increase client comfort level with the gift.

Increased Financial Security for Non-Grantor Spouse

The fact that the spouse’s distribution rights last for life means potential access to trust’s assets continues, even if the donor dies.

Possible Tax Advantages

Properly drafted and properly implemented by an attorney, a SLAT can provide a family with federal income tax and federal estate tax advantages.

A SLAT is Ideal for Married Couples who:

  • Are typically age 40 and older
  • Have assets for retirement, but possibly desire more
  • Have strong relationships and no chance of divorce
  • Have an insurable grantor
  • Share wealth transfer goals between spouses

Possible Disadvantages of a SLAT:

  • The non-grantor spouse could die first
  • The couple could divorce and upset the workings of the SLAT

Are you ready to start working on this strategy with your affluent clients? Contact us today.