Spousal Limited Access Trust (SLAT) for Asset Protection in Florida

A spousal limited access trust is an irrevocable trust that one spouse creates and funds for the benefit of the other spouse. The grantor spouse transfers assets into the trust, removing them from the grantor’s personal ownership and placing them beyond the reach of the grantor’s creditors. The beneficiary spouse retains access to trust assets through distributions made at the trustee’s discretion.

Florida’s 2022 amendment to § 736.0505(3) solved the biggest problem in SLAT planning: what happens when the beneficiary spouse dies first. Before the amendment, the grantor permanently lost all indirect access to trust assets. The amended statute eliminates that risk for SLATs created and funded after June 30, 2022.

How a SLAT Works

One spouse (the grantor) creates an irrevocable trust naming the other spouse as the primary lifetime beneficiary. Children or other descendants are typically named as remainder beneficiaries who receive trust assets after the beneficiary spouse’s death.

The grantor funds the trust with separate property or with the grantor’s share of marital assets. Once transferred, the assets belong to the trust and the grantor’s creditors cannot reach them because the grantor holds no beneficial interest.

The trust agreement typically limits distributions to an ascertainable standard (health, education, maintenance, and support), though broader discretionary language can be used. Either the beneficiary spouse or an independent trustee makes distribution decisions. An independent co-trustee strengthens asset protection because it eliminates any argument that the beneficiary spouse controls the assets.

During the marriage, the grantor benefits indirectly from the SLAT through the household spending of the beneficiary spouse. Each spouse can act as trustee of the SLAT that the other spouse created. The beneficiary spouse can open a checking account in the trust’s name to receive distributions and pay family expenses from that account. From a practical household standpoint, family income does not change when assets move into reciprocal SLATs. The money is simply held in a different structure.

Asset Protection Under Florida Law

A SLAT provides creditor protection from multiple directions because the trust separates legal ownership from both spouses’ personal estates.

Protection from the Grantor’s Creditors

The grantor has no beneficial interest in the trust. Under § 736.0505(1)(b), a creditor can reach only assets that can be distributed to or for the settlor’s benefit. Because the SLAT prohibits distributions to the grantor while the beneficiary spouse is alive, the grantor’s creditors have no claim against trust assets. This protection rests on Florida’s prohibition against self-settled trusts, a principle that does not depend on a DAPT statute or any conflict-of-law analysis.

Protection from the Beneficiary Spouse’s Creditors

The beneficiary spouse’s interest is protected by two independent legal barriers. A valid spendthrift clause under § 736.0502 prevents the beneficiary spouse’s creditors from attaching the trust interest. Discretionary distribution authority under § 736.0504(2) prevents a creditor from compelling the trustee to make any distribution at all. Combining both provisions in the same trust is the standard approach.

Exception Creditors

Florida law recognizes three categories of creditors who can penetrate spendthrift protection. A beneficiary’s child, spouse, or former spouse with a support or maintenance judgment can seek a court order attaching distributions. So can a judgment creditor who provided services to protect the beneficiary’s trust interest (typically an attorney) and a government creditor, either the state of Florida or the United States.

Exception creditors can seek a court order attaching distributions, but only as a last resort after exhausting other collection methods under § 736.0503(3). Discretionary distribution authority may block even exception creditors, because no creditor can force a trustee to exercise discretion it is not required to exercise.

The 2022 Amendment: How the Grantor Becomes a Beneficiary

Before 2022, the grantor spouse faced a permanent loss of access if the beneficiary spouse died first. The grantor could not be added as a beneficiary without triggering Florida’s self-settled trust rule, which would expose all trust assets to creditors.

Florida Statutes § 736.0505(3), amended effective July 1, 2022, recognizes three categories of trusts whose assets are deemed contributed by the beneficiary spouse rather than the grantor after the beneficiary spouse’s death:

1. Marital deduction trusts under IRC § 2523(e), providing the beneficiary spouse with a life estate and a general power of appointment. 2. QTIP trusts for which an election under IRC § 2523(f) has been made (qualified terminable interest property trusts). 3. SLATs meeting three statutory requirements. The beneficiary spouse must remain a trust beneficiary for their entire lifetime. The grantor cannot be a beneficiary at any time during the beneficiary spouse’s lifetime. Transfers to the trust must qualify as completed gifts under IRC § 2511.

The third category is the new addition. When all three requirements are satisfied, the trust is legally recharacterized after the beneficiary spouse’s death. The deceased beneficiary spouse is treated as the settlor, not the grantor. The grantor can then be added as a beneficiary with full spendthrift and discretionary distribution protection, effectively converting the SLAT into a domestic asset protection trust without relying on any DAPT statute.

The Exception Creditor Trust Strategy

One concern with the 2022 amendment is whether exception creditor claims against the grantor, after the grantor becomes a beneficiary, could reach all trust assets. The IRS might also argue that the grantor’s potential access triggers estate tax inclusion under IRC §§ 2036 or 2038.

An advanced drafting strategy addresses this by splitting the SLAT into two trusts from inception. The first trust (sometimes called an exception creditor trust) holds a defined amount, typically $400,000 to $500,000, and is the only trust from which distributions may satisfy exception creditor claims. The second trust holds the balance and excludes the grantor from any distributions that could satisfy exception creditor obligations.

If an exception creditor ever obtains a court order attaching distributions, only the exception creditor trust is exposed. The second trust’s assets remain outside the reach of those claims. The IRS argument that the grantor’s potential benefit extends to the entire trust is limited to the exception creditor trust’s value. Two trusts cost more than one because they require two trust agreements and separate administration, but for couples transferring substantial assets, the added protection justifies the cost.

SLAT vs. Tenancy by the Entirety

Many Florida married couples rely on tenancy by the entirety to protect jointly held assets from individual creditors. Entireties ownership works during the marriage, but it has a structural weakness that a SLAT eliminates.

If the non-debtor spouse dies first, the surviving debtor spouse inherits the asset outright. The asset loses its entireties protection and becomes fully available to the surviving spouse’s creditors. For couples where one spouse faces greater liability exposure (a physician, business owner, or real estate developer), this sequence can be devastating.

A SLAT eliminates the order-of-death problem. Assets transferred into the trust are protected from the grantor’s creditors regardless of which spouse dies first. Under the 2022 amendment, the grantor can become a trust beneficiary after the beneficiary spouse’s death without losing creditor protection.

Feature	Tenancy by the Entirety	SLAT
Protection during marriage	Yes (from individual creditors)	Yes (from grantor’s and beneficiary’s creditors)
Protection if non-debtor spouse dies first	Lost entirely	Maintained under 2022 amendment
Protection if debtor spouse dies first	Asset passes to surviving non-debtor spouse	Trust continues for remaining beneficiaries
Joint creditors	Not protected	Protected (trust assets not jointly owned)
Divorce	Protection lost; asset divided	Trust continues, but grantor loses indirect access

Common Drafting Mistakes

The 2022 amendment created new planning opportunities, but the statutory requirements are precise. Mistakes in the trust agreement can disqualify the SLAT from the amended statute’s protection entirely.

Adding the grantor back on divorce, not just on death. A Florida SLAT that allows the grantor to become a beneficiary upon divorce rather than only upon the beneficiary spouse’s death violates the statutory requirement. The grantor cannot be a beneficiary during the beneficiary spouse’s lifetime. Some drafters carry over language from DAPT-jurisdiction trusts without adjusting for Florida’s narrower rule.

Removing the beneficiary spouse on divorce. The statute requires the beneficiary spouse to remain a beneficiary “for the lifetime of the settlor’s spouse.” A provision that automatically strips the beneficiary spouse’s interest upon filing for divorce may disqualify the trust. The beneficiary spouse would no longer be a beneficiary for their entire lifetime. This creates a tension with standard divorce-protection drafting.

Including a tax reimbursement clause. A SLAT that gives the trustee discretion to reimburse the grantor for income taxes on trust income creates a problem. The IRS may treat the grantor as a beneficiary before the beneficiary spouse’s death. If the grantor can receive trust funds, even indirectly through tax reimbursement, the statutory requirement fails. The safer approach is to omit the reimbursement clause entirely or make the trust a grantor trust through other mechanisms.

Broad trust protector powers. If a trust protector can remove the beneficiary spouse as a beneficiary, the IRS may argue the protector has a fiduciary duty to exercise that power under certain conditions. The grantor could be treated as having a beneficial interest before the beneficiary spouse’s death. Trust protector provisions need to exclude any power that could terminate the beneficiary spouse’s interest.

Failing to ensure a completed gift. The transfer must qualify as a completed gift under IRC § 2511. If the grantor retains sufficient powers over the trust, such as the power to revoke or the power to change beneficiaries, the gift may be incomplete. An incomplete gift disqualifies the SLAT from the third category under § 736.0505(3).

The Boomerang SLAT: Access During the Beneficiary Spouse’s Lifetime

The 2022 amendment addresses what happens after the beneficiary spouse dies. A separate drafting strategy addresses a different concern: what if the grantor needs access to trust assets while the beneficiary spouse is still alive?

A boomerang SLAT includes an independent trust protector with the power to add the grantor as a trust beneficiary at any time, including during the beneficiary spouse’s lifetime. If the trust protector exercises this power, the grantor gains a beneficial interest and can receive distributions.

The trade-off is that a boomerang SLAT does not qualify for the 2022 amendment’s protection. Because the grantor may become a beneficiary during the beneficiary spouse’s lifetime, the trust cannot satisfy the statutory exclusion requirement. Instead, the boomerang SLAT relies on Florida common-law trust principles: spendthrift and discretionary distribution provisions protect the grantor’s interest as a third-party beneficiary, on the theory that the trust protector’s independent decision to add the grantor is not self-settlement.

This structure functions like a domestic asset protection trust without formation in a DAPT state, but it has not been tested in Florida courts. The protection rests on an untested legal theory, and the IRS may argue that trust assets belong in the grantor’s estate if the grantor is added as a beneficiary.

For couples who want both statutory protection under the 2022 amendment and during-lifetime flexibility, the exception creditor trust strategy offers a middle path. The grantor cannot become a beneficiary of the primary trust during the beneficiary spouse’s lifetime, but the structure limits exception creditor exposure after the beneficiary spouse dies.

Divorce Risk and Mitigation

Divorce is the primary non-legal risk in SLAT planning. If the grantor and beneficiary spouse divorce, the grantor permanently loses indirect access to trust assets.

Standard drafting addresses this through a floating spouse provision, which defines the beneficiary as whoever the grantor is married to at any given time. If the initial marriage ends, the former spouse is automatically removed and the grantor’s new spouse can be added. However, removing the beneficiary spouse upon divorce may disqualify the trust from the 2022 amendment if the removal occurs before the beneficiary spouse’s death.

One approach is to reduce, but not eliminate, the former spouse’s interest upon divorce. The trust can provide that upon filing for divorce, the former spouse’s distributions are suspended or reduced to a nominal level. The former spouse technically remains a beneficiary to satisfy the statutory lifetime requirement. The trust protector can hold additional powers to manage the transition. These provisions require precise drafting to preserve both the 2022 amendment’s protection and the grantor’s practical interests.

Reciprocal Trust Doctrine

Married couples sometimes create reciprocal SLATs, where each spouse creates a trust for the other. If the two trusts are substantially identical in terms, funding, trustees, distribution standards, and timing, the IRS may invoke the reciprocal trust doctrine to “uncross” them. Each spouse would then be treated as the settlor of the trust that benefits them, converting both trusts into self-settled arrangements. Both the estate tax benefits and the asset protection would be lost.

Avoiding this requires meaningful differences between the two trusts: different funding amounts, different trustees, different distribution standards, different beneficiary structures, and staggered creation dates.

Estate Tax Considerations

SLATs remove assets, and all future appreciation on those assets, from the grantor’s taxable estate. The grantor’s transfer uses a portion of the federal lifetime gift and estate tax exemption.

The federal exemption is $15 million per individual ($30 million for married couples) as of January 1, 2026, following the One Big Beautiful Bill Act’s permanent increase. The TCJA sunset that would have cut the exemption roughly in half did not occur. The exemption will be adjusted for inflation starting in 2027.

The higher permanent exemption reduces the estate-tax urgency that drove many SLAT formations between 2018 and 2025. For couples whose combined estates fall below $30 million, the estate tax motivation is less pressing. For these couples, the asset protection benefits of a SLAT, not the tax savings, are the primary reason to use the structure.

One unresolved question is whether the IRS will treat SLAT assets as included in the grantor’s estate under IRC §§ 2036 or 2038 after the grantor becomes a beneficiary. Several commentators have flagged this risk, and no IRS ruling or court decision has settled it. Couples considering this structure need both an asset protection attorney and a tax advisor to evaluate the estate tax implications.

Cost and Planning Threshold

A SLAT typically costs between $5,000 and $10,000 to establish, depending on the complexity of the trust agreement. The exception creditor trust structure, which involves two separate trust agreements, costs more. Annual administration costs depend on whether the trustee is a family member or a professional fiduciary.

SLATs make the most sense when married couples have meaningful assets to protect, typically a net worth above $1 million or liquidity above $500,000. Florida asset protection for married couples typically starts with tenancy by the entirety, but a SLAT addresses the order-of-death problem that entireties ownership cannot solve. For couples with more substantial exposure, an offshore trust provides stronger protection because it places assets outside U.S. court jurisdiction entirely. A SLAT protects assets within the Florida legal system; an offshore trust removes them from it.