Spousal Limited Access Trust (SLAT)

What Is a SLAT? 

A Spousal Limited Access Trust (also called a Spousal Lifetime Access Trust) is an irrevocable trust that removes the trust assets (and any income deriving from the trust assets) from the grantor’s estate, but includes a provision allowing the grantor’s spouse (or spouse and children/grandchildren) limited access to trust assets, thereby indirectly benefiting the grantor during life.

General Design of a SLAT 

Distributions 

Distributions from the SLAT may be made automatically or at the discretion of the trustee. The grantor's descendants are typically the ultimate beneficiaries of the trust and the trust can contain legacy provisions that enable tax-free distributions to multiple generations. For example, the spouse can be given a testamentary power of appointment as to how assets will pass to descendants. 

Trust Terms and Trustee 

The terms of the trust cannot reserve for the grantor any rights or powers over the trust assets. Furthermore, someone other than the grantor (who is also the insured for ILIT purposes) must serve as trustee. It is a significant advantage that the spouse can serve as trustee, provided the life insurance policy inside the ILIT does not insure the spouse and the spouse’s rights to trust assets are appropriately limited. 

Other SLAT Benefits 

Creditor Protection 

SLATS also offer significant creditor protection for both the grantor and the spouse, since the assets are no longer part of the grantor’s estate and never become part of the spouse’s estate. 

Probate 

Like any other trust, assets in the SLAT avoid probate. This saves time and expense, as well as maintaining privacy.