When couples explore creating a Spousal Lifetime Access Trust (SLAT), one of the first decisions they need to make is identifying which assets to include. Families may consider placing cash, marketable securities, life insurance, or even business interests into the trust as part of SLAT estate planning. Liquidity is important, but beyond that, the best options depend on your assets and your priorities.

At Robbins Estate Law, we focus exclusively on estate planning, probate, and estate litigation in Austin, Cedar Park, and Round Rock. Our team is one of the largest estate law groups in central Texas, and we provide predictable flat fees, clear timelines, and carefully tailored guidance.

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Key Takeaways

  • SLATs must be irrevocable once funded — Once a grantor transfers assets into a Spousal Lifetime Access Trust, those assets cannot be reclaimed. This permanent transfer is what removes the assets from the taxable estate and provides creditor protection.
  • Cash and marketable securities offer the most flexibility — Liquid assets like cash, stocks, and bonds allow the trustee to make regular distributions to the beneficiary spouse for household needs. Illiquid assets like real estate or business interests can limit the trustee's ability to support the beneficiary spouse over time.
  • Life insurance inside a SLAT passes proceeds income-tax-free — When properly structured, a life insurance policy held inside a SLAT allows death benefit proceeds to flow into the trust free of income tax and outside the taxable estate. This structure can also leverage the GST exemption to benefit grandchildren.
  • Business interests shift future appreciation out of your estate — Transferring shares of a privately held company into a SLAT means any growth in the business's value accumulates outside the grantor's taxable estate. This can be especially valuable for Texas business owners expecting significant appreciation.
  • The GST exemption can be applied at trust creation — Grantors can allocate their lifetime generation-skipping transfer tax exemption when funding the SLAT, allowing trust assets and future growth to eventually pass to grandchildren without an additional layer of transfer tax.
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About the Author

Kyle Robbins, Esq.

Kyle Robbins is a renowned Texas Estate Planning attorney who has helped thousands of families secure their legacies. He specializes in simplifying complex tax and asset protection strategies into transparent, flat-fee plans with lifetime support.

What Is a Spousal Lifetime Access Trust?

A trust is a legal structure that owns property, which a trustee uses to benefit one or more beneficiaries. The trustee, an individual or institution, manages the trust according to the rules in the trust document. 

SLATs are a type of trust designed to reduce taxes and save wealth. Understanding how they work and their benefits is key to determining the best assets to transfer into them.

SLAT Terms

In a SLAT, one spouse transfers assets into a trust for the benefit of the other. A SLAT may also name other family members to inherit what is left in the trust after the beneficiary spouse dies.

The spouse who sets up the trust is the grantor, and the other is the beneficiary. SLATs must be irrevocable, meaning you cannot take assets back once you place them inside the trust. Yet, irrevocable trusts provide unique asset protection from creditors.

SLATs typically authorize the beneficiary spouse to:

  • Receive income that the trust generates, such as dividends or interest;
  • Use trust funds for health, education, maintenance, or support; and
  • Receive distributions of principal, if the trustee decides it is appropriate.

Both spouses benefit indirectly because distributions to the beneficiary spouse support shared household needs. 

Estate and Gift Tax Benefits

When someone dies, the government adds up the value of everything they own, minus certain exclusions, to determine that person’s taxable estate. If the estate is larger than the federal estate tax exemption, the government may tax the excess, reducing what heirs receive.

The government also taxes certain gifts made during life. If a person gives away more than an annual exclusion in a given year, the excess reduces their lifetime estate and gift tax exemption—the combined amount they can transfer tax-free during life or at death.

By moving assets into a SLAT, the grantor removes them and any appreciation from their taxable estate and can avoid the estate and gift tax.

Generation-Skipping Transfer Tax Benefits

If parents leave assets to children, the government expects to tax them again when the children later pass them on. But if parents skip their children and give directly to grandchildren, a layer of tax disappears.

The generation-skipping transfer (GST) tax applies directly to transfers that bypass children to replace that missing layer. In other words, the GST taxes property transferred to a grandchild as if it had first gone through the child’s estate. 

Each person has a lifetime GST exemption. The grantor can use part of their exemption when they create the SLAT, so assets and their future growth can eventually pass to grandchildren free of GST tax.

Assets That Can Fund a Spousal Lifetime Access Trust

The assets you use to fund a SLAT determine how well the trust can meet its purposes. For example, liquid assets may allow a trustee to make regular distributions for household expenses, while less liquid assets may provide long-term growth but less flexibility for withdrawals. 

Some of the more common assets used include:

  • Cash. This asset offers immediate liquidity for the trustee to distribute to the beneficiary spouse, which makes it a flexible starting point. Cash gifts into the SLAT reduce the grantor’s lifetime gift and estate tax exemption but remove that amount and any future growth from the taxable estate. 
  • Marketable securities. Stocks, bonds, and mutual funds can generate both income and long-term appreciation. That income can be distributed under the trust terms to support the beneficiary spouse, while the appreciation grows outside the taxable estate. 
  • Life insurance. At the insured spouse’s death, life insurance policy proceeds flow into the trust income-tax-free, bypassing the taxable estate entirely. Properly structured, a SLAT-holding life insurance policy can also take advantage of the GST exemption, allowing proceeds to pass to grandchildren without the extra layer of tax.
  • Business interests. Business interests can be powerful assets for SLAT funding despite lacking liquidity. When the grantor transfers shares of a privately held company, any future appreciation occurs outside the taxable estate. 

Some couples consider placing real estate or similar investments into a SLAT. These assets can produce income or growth for the trust, but can be challenging to value and sell. They also lack liquidity, making it more difficult for the trustee to use them for the beneficiary spouse’s support.

 

Spousal Lifetime Access Trust Pros and Cons

If you are considering a SLAT, it is important to weigh the various pros and cons they bring to your plan. 

Some of the pros of SLATs include:

  • Removing assets from the taxable estate, reducing future estate tax liability;
  • Growth on trust assets occurs outside the estate, which may lower overall tax exposure; and
  • The beneficiary spouse can receive distributions, providing household access to funds.

On the other hand, cons include:

  • The grantor permanently gives up ownership of the transferred assets,
  • Some asset types may limit liquidity, and
  • Changes in tax law could affect the long-term benefits of the trust.

These advantages and drawbacks can help couples decide how and if a SLAT fits into their broader estate plan.

Using a SLAT Estate Planning Strategy

Deciding on a SLAT estate planning strategy involves aligning your family’s goals, tax considerations, and financial security. The best choice of assets depends on your household’s financial mix, risk tolerance, and long-term goals, such as providing for a spouse, supporting children, or minimizing future taxes. 

At Robbins Estate Law, we guide families through each stage of SLAT estate planning. Our attorneys have extensive experience with trusts, wills, probate, and estate litigation. We design strategies that protect your loved ones and provide peace of mind. Contact us today to learn how we can help you preserve your wealth and legacy.

Frequently Asked Questions

What assets can I put into a Spousal Lifetime Access Trust in Texas?
Common assets used to fund a SLAT include cash, marketable securities such as stocks and bonds, life insurance policies, and business interests in privately held companies. Real estate can also be placed in a SLAT but presents valuation and liquidity challenges that can make trustee distributions more difficult. Robbins Estate Law helps Texas families evaluate which assets best match their financial goals and estate planning priorities.
Can I take assets back out of a SLAT if I change my mind?
No. SLATs are irrevocable, meaning the grantor permanently relinquishes ownership and control over transferred assets. This is a core feature of the trust — the irrevocability is what removes assets from your taxable estate and shields them from creditors. Before funding a SLAT, it is essential to work with an experienced estate planning attorney to confirm the assets you transfer are ones you can afford to give up permanently.
How does a SLAT reduce estate taxes in Texas?
When a grantor funds a SLAT, those assets are removed from their taxable estate. Because Texas has no state estate tax, the primary tax concern for most Texas families is the federal estate tax, which applies to estates exceeding the federal lifetime exemption. Any future appreciation on SLAT assets also grows outside the taxable estate, potentially reducing the overall federal estate tax owed at death.
What happens to a SLAT if my spouse dies first?
If the beneficiary spouse dies, distributions to that spouse stop because they are no longer living. The trust document typically names remainder beneficiaries — such as children or grandchildren — who inherit the trust assets after the beneficiary spouse's death. This is why careful trust drafting matters, and Robbins Estate Law designs SLAT structures that account for these contingencies from the outset.
Can a SLAT benefit our grandchildren and avoid generation-skipping transfer tax?
Yes. A grantor can allocate part of their lifetime generation-skipping transfer (GST) tax exemption when funding the SLAT. This allows assets inside the trust, along with all future growth, to eventually pass to grandchildren without triggering an additional layer of GST tax. Life insurance held inside a SLAT is a particularly efficient vehicle for this strategy because policy proceeds pass income-tax-free and can be structured to take full advantage of the GST exemption.
Is a SLAT a good estate planning strategy for business owners in Texas?
SLATs can be especially effective for Texas business owners who hold interests in privately held companies and expect the business to appreciate significantly over time. By transferring business interests into the SLAT now, any future growth in value occurs outside the taxable estate. However, business interests lack liquidity, so owners should also ensure the trust holds other assets the trustee can use for distributions to the beneficiary spouse. Robbins Estate Law works with business-owning families in Austin, Cedar Park, and Round Rock to build SLAT strategies tailored to their specific holdings.