Spousal Lifetime Access Trusts

Preserving access while planning for future generations.

A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust created by one spouse for the benefit of the other spouse and, potentially, other family members. The strategy allows married couples to transfer assets for the benefit of future generations while preserving the beneficiary spouse’s ability to receive trust distributions during their lifetime.

By balancing spousal access with long-term wealth transfer, a SLAT can support estate tax planning and asset protection while helping preserve family wealth across generations.

Planning Overview

How a Spousal Lifetime Access Trust Works

The spouse establishing the SLAT—often referred to as the donor or funding spouse—transfers assets to an irrevocable trust for the benefit of the other spouse. An independent trustee administers the trust and may make distributions to the beneficiary spouse in accordance with the trust agreement.

Following the beneficiary spouse’s death, the remaining trust assets may continue for children, grandchildren, or other beneficiaries.

Estate Tax Planning

Assets transferred through a completed gift may be removed from the funding spouse’s taxable estate, along with subsequent appreciation, potentially reducing future federal estate tax exposure.

Spousal Access

The beneficiary spouse may receive income or principal distributions as permitted by the trust agreement, providing financial flexibility while the trust remains in place.

Multi-Generational Planning

A SLAT may be structured to continue for children and future generations, supporting long-term wealth preservation and family planning objectives.

Gift Tax Treatment

Completed Gift and Incomplete Gift SLATs

SLATs may be structured as completed or incomplete gifts for federal gift tax purposes. Both types of SLATs are irrevocable and may allow the beneficiary spouse to receive distributions of income and, under certain conditions, principal. However, their tax treatment and planning objectives differ.

Completed Gift SLAT

A transfer to a Completed Gift SLAT is treated as a completed gift and generally uses a portion of the funding spouse’s available lifetime gift and estate tax exemption. Properly structured, the transferred assets and their future appreciation are removed from the funding spouse’s taxable estate.

Incomplete Gift SLAT

A transfer to an Incomplete Gift SLAT is not treated as a completed gift and does not use the funding spouse’s lifetime gift tax exemption. The assets generally remain part of the funding spouse’s taxable estate, but the structure may offer asset protection and other planning benefits.

THE POWER OF SPOUSAL LIFETIME ACCESS TRUSTS (SLATS) →

Jurisdiction Selection

Why South Dakota for a SLAT?

Selecting the best trust jurisdiction is an important consideration when establishing a SLAT. South Dakota’s modern trust laws provide a sophisticated framework for both Completed Gift and Incomplete Gift SLATs, offering flexibility, privacy, and long-term planning capabilities.

No State Income Tax

South Dakota does not impose a state income tax on trust income, dividends, interest, or capital gains.

Asset Protection

South Dakota’s asset protection laws may provide meaningful protection from future creditor claims.

Dynasty Trust Planning

A SLAT may incorporate Dynasty Trust planning, allowing trust assets to remain in trust indefinitely for children, grandchildren, and future generations.

Flexible Trust Governance

Directed Trusts, Trust Protectors, and other fiduciary roles can provide greater flexibility and continued advisor involvement.

Questions About Spousal Lifetime Access Trusts?

If you would like to learn more about Spousal Lifetime Access Trusts or explore planning opportunities available under South Dakota trust law, reach out to us through our contact form or call us at (605) 224-9189.