A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust designed to benefit a spouse during their lifetime while also providing potential estate tax benefits for the grantor.
The primary purpose of a SLAT is to allow one spouse (the grantor) to make gifts to the trust for the benefit of the other spouse while removing those assets from the grantor’s taxable estate. This can be particularly advantageous in estate planning, as it may help reduce the overall estate tax burden upon the death of the grantor.
When the grantor funds the SLAT, the other spouse can access the trust’s income or principal, providing financial support without the assets being included in the grantor’s estate for tax purposes. This arrangement can be beneficial in managing wealth across generations and can also enhance the financial security of the spouse who benefits from the trust.
For example, if a husband creates a SLAT and funds it with $1 million, the assets in the SLAT would not be included in his estate at the time of his death. His wife, as the beneficiary of the SLAT, can receive distributions from the trust to cover living expenses or other needs. However, because the trust is irrevocable, the husband cannot change its terms or reclaim the assets once they are transferred to the trust.
In Texas, including the Houston area, SLATs can be particularly useful for couples looking to leverage the benefits of estate tax exemptions while ensuring that one spouse remains financially supported during their lifetime.
« Back to Glossary Index