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 by the trustee.

Florida’s 2022 amendment to § 736.0505(3) made SLATs substantially more useful for asset protection planning. Before the amendment, a grantor spouse who outlived the beneficiary spouse lost all indirect access to trust assets and could not be added as a beneficiary without converting the trust into a self-settled arrangement. 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 (the beneficiary) 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. The grantor no longer owns them, and the grantor’s creditors cannot reach them because the grantor holds no beneficial interest in the trust.

The beneficiary spouse can receive distributions of income and principal from the trust during their lifetime. The trust agreement typically limits distributions to an ascertainable standard such as health, education, maintenance, and support, though broader discretionary language can be used depending on the planning objectives. The beneficiary spouse or an independent trustee makes distribution decisions according to the trust terms.

During the marriage, the grantor benefits indirectly from the SLAT through the household spending of the beneficiary spouse. This indirect access is the “limited access” that gives the trust its name.

Asset Protection Benefits

A SLAT provides creditor protection on multiple levels because the grantor is not a trust beneficiary during the beneficiary spouse’s lifetime.

Protection from the Grantor’s Creditors

The grantor has no beneficial interest in the trust. Under Florida Statutes § 736.0505(1)(b), a creditor can reach only assets that can be distributed to or for the benefit of the settlor. 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 does not depend on a DAPT statute or favorable conflict-of-law analysis. It rests on the straightforward principle that Florida law protects irrevocable trusts where the settlor is not a beneficiary.

Protection from the Beneficiary Spouse’s Creditors

The beneficiary spouse’s interest in the trust is protected by standard spendthrift and discretionary distribution provisions. Under Florida Statutes § 736.0502, a valid spendthrift clause prevents the beneficiary spouse’s creditors from attaching the spouse’s trust interest. Under § 736.0504(1), a creditor cannot compel the trustee to make a discretionary distribution. Together, these provisions prevent the beneficiary spouse’s creditors from accessing trust property while it remains in the trust.

Protection After the Beneficiary Spouse’s Death

Before the 2022 amendment, the grantor spouse faced a difficult choice if the beneficiary spouse died first. The grantor could not become a trust beneficiary without triggering Florida’s self-settled trust prohibition, which would expose all trust assets to the grantor’s creditors.

Florida Statutes § 736.0505(3), as amended effective July 1, 2022, resolves this problem for qualifying SLATs. After the beneficiary spouse’s death, the trust is deemed to have been contributed by the deceased spouse rather than by the grantor. This legal fiction means the grantor can be added as a beneficiary without the trust being classified as self-settled. The grantor’s creditors still cannot reach trust assets because the grantor is no longer considered the settlor for creditor-claim purposes.

Three requirements must be satisfied for the amended statute to apply. 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 for federal gift tax purposes.

SLAT vs. Tenancy by the Entirety

Many Florida married couples rely on tenancy by the entirety to protect jointly held assets from the creditors of either spouse individually. Entireties ownership is effective during the marriage, but it has a significant structural weakness.

If the non-debtor spouse dies first, the surviving debtor spouse inherits the asset outright. At that point, 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, this sequence can be devastating.

A SLAT eliminates this risk. 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 even become a trust beneficiary after the beneficiary spouse’s death without losing creditor protection. A SLAT therefore provides more durable asset protection than entireties ownership for couples concerned about the order-of-death problem.

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 beneficiary spouse and remainder beneficiaries
Joint creditors	Not protected	Protected (trust assets are not jointly owned)
Divorce	Protection lost; asset divided	Trust continues, but grantor loses indirect access

Divorce Risk and Mitigation

Divorce is the primary risk in SLAT planning. If the grantor and beneficiary spouse divorce, the grantor permanently loses indirect access to trust assets because the beneficiary spouse is no longer part of the grantor’s household.

Standard SLAT drafting addresses this risk 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 as a beneficiary and the grantor’s new spouse (if any) can be added.

The trust protector can also hold the power to remove the beneficiary spouse upon the filing of divorce proceedings, preventing a divorcing spouse from receiving distributions during the pendency of the divorce. These provisions should be included in every SLAT where the grantor has meaningful creditor exposure.

Reciprocal Trust Doctrine

Married couples sometimes consider creating reciprocal SLATs, where each spouse creates a trust for the benefit of the other. If the two trusts are substantially identical in their terms, funding, and timing, the IRS may invoke the reciprocal trust doctrine to “uncross” the trusts and treat each spouse as the settlor of the trust that benefits them.

The consequence would be that each trust is reclassified as self-settled, eliminating both the estate tax benefits and the asset protection. To avoid this outcome, reciprocal SLATs must differ meaningfully in their terms, funding amounts, trustees, distribution standards, and timing of creation.

Estate Tax Planning Dimension

SLATs are widely used to take advantage of the federal gift and estate tax exemption. The grantor’s transfer of assets into the SLAT uses a portion of the grantor’s lifetime exemption amount. Assets transferred to the trust, including all future appreciation, are removed from the grantor’s taxable estate.

The current federal exemption amount is scheduled to decrease substantially at the end of 2025 unless Congress extends the current levels. For couples with estates approaching or exceeding the exemption threshold, funding a SLAT before the reduction takes effect preserves the higher exemption amount for assets already transferred.

The estate tax planning aspect of a SLAT is secondary to its asset protection function for purposes of this discussion. Couples considering a SLAT should work with both an asset protection attorney and a tax advisor to coordinate the trust’s design with their overall estate planning and asset protection strategy.