SLAT vs ILIT for High Net Worth Estate Planning: Which One Protects Your Legacy Best?

SLAT vs ILIT for High Net Worth Estate Planning isn’t just a legal distinction—it’s a strategic decision that could determine how well your wealth serves your family, both now and for generations to come.

We were deep into a conversation with Andrew Howell, one of the foremost estate planning attorneys in the country, when he casually dropped a statement that made us pause: “I haven’t drafted a new ILIT in over a decade.”

Wait… what?

For those of us in the world of estate strategy, that kind of remark is the equivalent of a mic drop.

And that’s when we knew: the conversation around trusts and legacy planning has shifted in a fundamental way.

He wasn’t saying ILITs are obsolete—but that SLATs have become the preferred vehicle for families who want more than just a tax shelter. They want flexibility, values-based guidance, and multigenerational control. That one sentence reframed everything we thought we knew about irrevocable trust structures—and gave us a deeper commitment to educating families about their options.

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Why This Matters

If you’re a high net worth individual navigating the estate planning world, you already know: it’s not just about minimizing taxes. It’s about maximizing impact.

You want your wealth to do more than sit in a trust. You want it to:

• Empower your family.
• Pass on your values.
• Stay protected from taxes, lawsuits, and family fragmentation.
• Serve as a guiding structure for generational growth.

That’s what today’s article is about. We’re unpacking SLAT vs ILIT for high net worth estate planning so you can:

• Understand the pros and cons of each structure.
• Learn how each trust operates in real-life scenarios.
• Discover which strategy aligns with your long-term legacy goals and family dynamics.

And if you missed our previous post, The Pros and Cons of an ILIT, that’s a must-read companion to this piece. It sets the stage for why SLATs are now stealing the spotlight.

The stakes are too high to leave this decision to a boilerplate legal plan or a one-size-fits-all document. You deserve a legacy plan as unique and dynamic as the family you’re building it for.

Let’s get into it.

What Is a SLAT (Spousal Lifetime Access Trust)?

Bruce and I have seen this firsthand: a SLAT is one of the most powerful tools for families who want access, flexibility, and control—while also removing assets from their estate.

With a SLAT, you gift assets into an irrevocable trust for your spouse’s benefit. This removes those assets (and any future growth) from your estate, reducing estate taxes and creating protection from creditors.

But here’s the real magic:

• Your spouse can access the trust assets during their lifetime.
• You (the grantor) can indirectly benefit from those assets.
• You can build in trust protectors, distribution trustees, and managers for increased control and long-term accountability.

And here’s where it gets even more powerful—many families are using SLATs as the foundation for their Family Bank strategy.

That means the trust isn’t just a vault—it’s a lending institution. Your children or grandchildren can borrow from the trust to:

• Start a business
• Purchase a first home
• Fund their education

But unlike a handout, these loans come with terms, accountability, and stewardship expectations. It’s not entitlement—it’s training. It’s a way to extend trust and responsibility.

Andrew emphasized that in states like Nevada, South Dakota, and Delaware, the flexibility of SLATs increases even more. These jurisdictions allow for:

• Decanting (the ability to modify the trust structure if necessary)
• Directed trust arrangements
• Extended perpetuity periods (ideal for dynasty planning)

This is a game-changer if you want your plan to adapt as your family evolves, your assets grow, or the law changes.

What Is an ILIT (Irrevocable Life Insurance Trust)?

ILITs have long been the go-to for families needing a simple, effective estate tax strategy.

Here’s how it works:

• You create a trust that owns your life insurance policy.
• You make premium payments (either directly or indirectly).
• When you pass away, the death benefit pays out to your heirs outside of your estate.

That means:

• No estate tax on the life insurance proceeds.
• Immediate liquidity for your family to cover estate taxes or provide inheritance.

Simple. Predictable. Efficient.

But here’s the trade-off:

• You can’t access the cash value.
• You can’t change the terms once the trust is finalized.
• You have no flexibility if your family needs change.

Andrew noted that he hasn’t created a new ILIT in over ten years. Why? Because for most high-net-worth families today, ILITs don’t offer the level of stewardship, adaptability, and long-term vision that SLATs can provide.

SLAT vs ILIT for High Net Worth Estate Planning

Let’s break this down further with a SLAT vs ILIT side-by-side comparison.

Access to Funds

• SLAT: Your spouse can access the funds, which often benefits both spouses—especially if you share finances or live in a community property state.
• ILIT: There is no access. Funds are locked until your death, and only the death benefit is distributed.

Estate Tax Efficiency

• Both structures remove assets from the estate and help mitigate estate tax.
• ILIT is ideal for creating tax-free liquidity upon death—particularly useful when estate taxes are due.
• SLAT is more comprehensive—it can hold life insurance and other appreciating assets like real estate, business interests, or investments.

Control and Flexibility

• SLAT: Offers greater control through the use of trust protectors, investment advisors, and decanting provisions. You can create a dynamic plan that adjusts over time.
• ILIT: Once established, you have little control. The trustee must follow the original instructions, and no changes can be made.

Long-Term Legacy Potential

• SLAT can be paired with a dynasty trust to span multiple generations. It creates a framework for values-based inheritance, accountability, and sustained financial growth.
• ILIT is primarily a one-and-done structure. It delivers a death benefit but lacks the tools to shape stewardship or culture.

So which is better?

It depends on your goal.

If you want simplicity and guaranteed tax-free payout, ILIT can still serve you well.

But if you want stewardship over time, multigenerational control, adaptability, and alignment with your family values, the SLAT wins hands down.

How Dynasty Trusts Multiply the Impact

One of the most exciting parts of this conversation is the potential to pair a SLAT with a dynasty trust. When structured correctly, this combination creates the gold standard in multigenerational planning.

Dynasty trusts:

• Hold wealth in trust for multiple generations.
• Avoid estate tax at each generational transfer.
• Provide creditor and divorce protection.
• Allow you to embed family values, mission statements, and distribution guidelines.

By combining a SLAT with a dynasty trust, you don’t just transfer money—you multiply impact.

You can:

• Equip your children with decision-making frameworks.
• Create funding mechanisms for education, business ventures, or charitable giving.
• Maintain oversight through successor trustees and trust protectors.

And with the family bank strategy layered in, you add a whole new dimension to your legacy:

• Your trust becomes a teaching tool for financial responsibility.
• Future generations learn to borrow and repay with purpose.
• Stewardship becomes a shared family value—not just a concept, but a practice.

You’re essentially giving your family a generational GPS. One that’s guided by your voice, your values, and your vision.

The structure you choose—SLAT vs ILIT—can either restrict your legacy or release it.

What This Means for You

Here’s what we want you to take away:

If you’re serious about protecting your wealth and passing on a legacy of more than money, you need a structure that does more than just “check the box.”

The SLAT vs ILIT decision isn’t about what worked 20 years ago. It’s about what works now—and what will still work decades from now.

You need a plan that:

• Protects assets.
• Minimizes taxes.
• Creates access and flexibility.
• Promotes family unity, stewardship, and purpose.

And when you incorporate the family bank strategy inside a SLAT and dynasty trust, you take legacy from passive to active. From accidental to intentional.

And you need advisors who aren’t just thinking about documents—but about destiny.

Most people assume estate planning is all about tax avoidance and airtight documents.

Your legacy isn’t the caboose. It’s the engine. Let’s build with that in mind.

Book A Strategy Call

And if you’re ready to make a move, our advisor team is ready to help you walk this out—without pressure, without overwhelm, and with full clarity.

Because your legacy matters.

And while the future might feel uncertain, the ability to take action today? That’s fully in your hands.

Start the conversation today.

We offer two powerful ways to help you create lasting impact:

1. Financial Strategy Call – Discover how Privatized Banking, alternative investments, tax-mitigation, and cash flow strategies can accelerate your time and money freedom while improving your life today. Let us show you how to align your financial resources for maximum growth and efficiency. Book a Strategy Call with our team today.
2. Legacy Strategy Call – If you want to uncover your family values, mission, and vision, and create a legacy that’s about more than just money, we can guide you through the process of financial stewardship and family leadership. Save time coordinating your family’s finances while building a legacy that lasts for generations. Book a Legacy Strategy Call to learn more about how we can help.

We specialize in working with wealth creators and their families to unlock their potential and build a meaningful, multigenerational legacy.