Managing Grantor Trust Status For SLATs Under IRC Section 677(a)

Spousal lifetime access trusts (SLATs) allow married couples to make substantial lifetime gifts while maintaining limited access to and control over transferred assets. Each spouse, as grantor, creates a trust for the benefit of their spouse, children and future generations. The non-grantor spouse may be a current discretionary beneficiary of the SLAT or be added later (access) and may, subject to appropriate safeguards, serve as a co-trustee (control) along with an independent trustee. In many cases, clients will never need access to SLAT assets, so an essential benefit of dual SLATs is the security they provide in ensuring access if needed.

The grantor trust rules in Internal Revenue Code Sections 671 to 679 establish the extent to whic…