Estate Planning: Spousal Lifetime Access Trust (SLAT) and Non-Grantor Trust (SLANT)
- Susan M. Signer
- Jan 29
- 4 min read
Updated: Feb 3
Blog by Susan M Signer Services
When planning your estate, choosing the right trust can make a significant difference in how assets are managed, protected, and taxed. Two common options for married couples are the Spousal Lifetime Access Trust (SLAT) and the Spousal Lifetime Access Non-Grantor Trust (SLANT). Knowing when to use each can help you maximize benefits and avoid pitfalls.
Check out the episode of the Up Your Assets podcast, when Ray Ferrara sits down with estate planning attorney Nicholas Grimaudo. They explore the latest updates to estate planning, focusing on permanent changes to estate tax rules.
Curious about what a $15 million exemption per person means for you? Or how these new laws can help you preserve more of your wealth? Thanks to the One Big Beautiful Bill, your estate exemption is now set at $15 million permanently shifting from the uncertainty that existed before.
In addition, Attorney Grimaudo discusses the advantages and disadvantages of SLAT and SLANT in your estate planning.
What Is a Spousal Lifetime Access Trust (SLAT)?
A Spousal Lifetime Access Trust is an irrevocable trust created by one spouse (the grantor) for the benefit of the other spouse and potentially other beneficiaries. The grantor transfers assets into the trust, removing them from their taxable estate while still allowing the beneficiary spouse to access income or principal as needed.
When to Use a SLAT
When you want to reduce your taxable estate but still provide financial support to your spouse.
If you expect your estate to exceed federal or state estate tax exemption limits.
When creditor protection for assets is a priority.
If you want to maintain some control over how assets are used by the beneficiary spouse.
What Is a Spousal Lifetime Access Non-Grantor Trust (SLANT)?
A Spousal Lifetime Access Non-Grantor Trust is similar in purpose but differs in tax treatment. The key distinction is that the trust is treated as a separate taxpayer for income tax purposes, not attributed to the grantor.
When to Use a Non-Grantor Trust (SLANT)
When you want to separate income tax liability from the grantor.
If the grantor expects to be in a higher income tax bracket than the trust.
When planning for multi-generational wealth transfer.
If you want to limit the grantor’s control over the trust assets for tax or legal reasons.
Comparing SLAT and SLANT Trusts
Feature | SLAT (Grantor Trust) | SLANT (Non-Grantor Trust) |
Taxation | Grantor is taxed on trust income. File timely Gift-Tax Returns | Trust files its own tax returns and pays taxes from income retained |
Estate Tax Benefits | Assets in Trust are generally excluded from Grantor's estate | Removes assets from Grantor’s estate, with tax benefits |
Access to Assets | Beneficiary spouse can receive distributions | Beneficiary spouse can receive distributions, but the trust's income tax burden is separate from Grantor |
Control | Grantor retains some indirect control | Less control by Grantor |
Creditor Protection | Strong protection of assets of both spouses | Strong protection |
Complexity | Generally easier to administer | More complex tax filings |
Flexibility | Irrevocable, problem if divorce or spouse predeceased | Structured to provide benefits to multiple generations |
Reciprocal Trust Doctrine | Differentiate Trusts:
| Differentiate Trusts:
|
What Are Real Case Scenarios of Using SLAT & SLANT?
Example 1: Using a SLAT for Estate Tax Reduction
John creates a SLAT for his wife, Mary, transferring $5 million in assets. Mary can receive income and principal as needed. John’s estate is reduced by $5 million, lowering potential estate taxes. Mary’s access ensures she has financial support without John’s estate being taxed on those assets.
Example 2: Using a SLANT for Income Tax Planning
Sarah sets up a Non-Grantor Trust for her husband, David. The trust owns income-producing assets. Because the trust pays its own taxes, Sarah avoids higher personal income taxes on trust earnings. David receives distributions, but the trust’s income tax burden is separate from Sarah’s.
Factors to Consider When Choosing Between SLAT and Non-Grantor Trust
Tax Brackets: Consider your and your spouse’s income tax brackets versus trust tax rates.
Estate Size: Larger estates may benefit more from SLAT’s estate tax advantages.
Control Preferences: SLATs allow more indirect control; Non-Grantor Trusts limit grantor control.
Access Needs: Both trusts allow spousal access, but terms can vary.
Complexity and Costs: Non-Grantor Trusts require more complex tax filings and administration.
Key Takeaways
Thanks to the One Big Beautiful Bill, your estate exemption is now set at $15 million permanently which is an enormous shift from the uncertainty that existed before.
But protecting your assets isn’t just about tax exemptions.
Whether you’re considering strategies before or after death, proper asset titling and smart use of trusts can reduce probate costs, protect against creditors, and help define your legacy. Even if your estate falls below the exemption threshold, there are still valuable income tax benefits and planning opportunities to consider. Are you making the right moves today or leaving your future up to chance? Consulting with an estate planning attorney who may help tailor the right trust for your situation. Understanding these options empowers you to protect your assets and support your spouse effectively.
Comments