SLAT vs GRAT: Which trust strategy moves more wealth out of your estate?

Two of the most widely-used irrevocable trust strategies for high-net-worth estate planning — but they work very differently. The right one depends on whether you want to use lifetime exemption now, whether your asset is expected to appreciate strongly, and whether you need spousal access.

SLAT vs GRAT comparison calculator

Enter your asset value, expected growth rate, and trust term. The calculator shows how much each strategy transfers to heirs and at what cost.

How each strategy works

SLAT — Spousal Lifetime Access Trust

You (the donor spouse) fund an irrevocable trust for the benefit of your spouse. The contribution is a completed gift — it uses your lifetime exemption but removes the asset and all future appreciation from your taxable estate. Your spouse can receive distributions under an HEMS (health, education, maintenance, support) standard, giving the household indirect access to those assets during your spouse's lifetime.

• Uses exemption: Yes — $15M per person in 2026 (OBBBA permanent). Without exemption, gift tax applies at 40%.
• What transfers: The full asset value plus all future appreciation.
• Spousal access: Yes, via distributions to spouse. At spouse's death, assets continue for descendants.
• Key risk: Reciprocal trust doctrine. If both spouses establish identical SLATs for each other, IRS can unwind them. Different trustees, different distribution terms, staggered dates required.
• Divorce risk: If you divorce, spouse remains trust beneficiary (irrevocable). Consider carefully.

GRAT — Grantor Retained Annuity Trust

You contribute assets to an irrevocable trust, retain the right to receive fixed annuity payments for a set term (typically 2–10 years), and structure the annuity to equal the IRS's expected value — so the gift value is approximately zero. Any appreciation the asset earns above the §7520 hurdle rate passes to heirs with no gift tax and no exemption use.

• Uses exemption: No (zeroed-out structure). Preserves your exemption for other uses.
• What transfers: Only the appreciation above the §7520 rate. If the asset underperforms the hurdle, nothing transfers — the annuity payments return everything to you (no loss, just no gain).
• Spousal access: No. Annuity goes back to grantor. Spouse has no access to trust assets.
• Mortality risk: If grantor dies during the trust term, assets return to the estate. Short terms (2-3 years) reduce this risk. Rolling GRATs replenish if the grantor survives.
• Legislative risk: Congress has periodically proposed minimum GRAT terms (10 years) and minimum remainder values — these proposals haven't passed, but watch for legislative changes.

When to use each strategy

Can you use both a SLAT and a GRAT?

Yes — and HNW families often do. A common structure: fund a SLAT with diversified assets to use exemption and retain spousal access, then run rolling GRATs on high-growth concentrated positions (pre-IPO stock, business interests) to capture appreciation above the hurdle without consuming additional exemption. The strategies complement each other.

The sequencing matters: if you're going to use a SLAT for one spouse, don't establish a mirror SLAT for the other spouse — that triggers the reciprocal trust doctrine. The GRAT is a better second tool for the other spouse or for the concentrated position.