Almost anyone except the grantor can serve as trustee of a Spousal Lifetime Access Trust. The beneficiary spouse, an adult child, a sibling, a trusted friend, a bank, or a professional fiduciary are all workable choices, and most SLATs end up using some combination of them as co-trustees. The person who created and funded the trust is the one firm exclusion, because naming the grantor as trustee collapses the tax benefits the SLAT was built to deliver.
The reason the question matters is that trustee selection is where a SLAT’s estate tax treatment is won or lost. Three provisions of the tax code can pull trust assets back into someone’s taxable estate if the wrong person holds the wrong power: retained enjoyment or control by the grantor,1Office of the Law Revision Counsel. 26 U.S. Code 2036 – Transfers With Retained Life Estate a retained power to alter, amend, or revoke,2Office of the Law Revision Counsel. 26 USC 2038 – Revocable Transfers and a general power of appointment held by a beneficiary.3Office of the Law Revision Counsel. 26 USC 2041 – Powers of Appointment Every trustee candidate has to clear those three rules.
Why the Grantor Cannot Serve
If the grantor acts as trustee of their own SLAT, they retain control over assets they supposedly gave away. The IRS treats the transfer as incomplete and includes the trust property in the grantor’s taxable estate at death.1Office of the Law Revision Counsel. 26 U.S. Code 2036 – Transfers With Retained Life Estate The gift accomplishes nothing it was meant to accomplish.
Even indirect control creates exposure. An implied understanding that the grantor will keep directing investments or shaping distributions can let the IRS argue the grantor never really let go. The same reasoning applies to retained powers to change how the trust operates, which falls under the provision on revocable transfers.2Office of the Law Revision Counsel. 26 USC 2038 – Revocable Transfers The practical rule is simple. The grantor stays out of the trustee role entirely, in name and in substance.
The Beneficiary Spouse as Trustee
The beneficiary spouse can serve as trustee, but their power to distribute money to themselves must be limited to an ascertainable standard: health, education, maintenance, and support. Estate planners call this the HEMS standard. Without it, a beneficiary who can distribute trust assets to themselves is treated as holding a general power of appointment, and the trust assets land in that spouse’s estate just as if they owned the property outright.3Office of the Law Revision Counsel. 26 USC 2041 – Powers of Appointment
The carve-out is specific. A power to use trust property for the beneficiary’s health, education, support, or maintenance is not a general power of appointment.3Office of the Law Revision Counsel. 26 USC 2041 – Powers of Appointment The trade-off is a hard ceiling on flexibility. A beneficiary spouse who serves as sole trustee cannot approve distributions to themselves beyond what HEMS covers. A vacation home for the family’s enjoyment is not health, education, maintenance, or support. Helping an adult child with a down payment is a different question, because that distribution runs to a different beneficiary, but the trustee-beneficiary still has to follow the trust’s terms for everyone else.
Many families decide this trade-off is worth it for the simplicity of keeping administration inside the household. Others want broader distribution discretion and bring in a co-trustee for that reason.
Family Members and Friends
An adult child, sibling, parent, or trusted friend can serve as trustee. Many families prefer this route because it keeps decision-making close and because an adult child who knows the family’s values can provide continuity across decades. The person just needs to be a legal adult with the capacity to manage fiduciary duties.
Think honestly about whether the candidate can handle the work. A SLAT trustee manages investments, approves and documents distributions, keeps records, and coordinates with tax professionals. Not everyone who is willing is equipped, and financial sophistication matters more than closeness to the family.
There is also a classification issue to understand. The tax code defines “related or subordinate parties” to include the grantor’s spouse, parents, siblings, children, and employees.4Office of the Law Revision Counsel. 26 U.S. Code 672 – Definitions and Rules These people are presumed to be subservient to the grantor when exercising trust powers. The presumption does not automatically disqualify them from serving, but it affects the grantor’s ability to remove and replace trustees and can affect the trust’s income tax status. When the plan calls for distribution flexibility beyond HEMS, picking someone outside this circle gives you the cleanest structure.
Corporate and Professional Trustees
Banks, trust companies, and licensed professional fiduciaries administer trusts as a core business function. They handle investment management, tax compliance, and regulatory reporting, and they bring continuity that no individual can match. A corporate trustee does not get sick, move away, or lose interest in the job.
Professional trustees also bring impartiality, which helps in families where money creates friction. A denial of a distribution request from a corporate trustee feels less personal than the same denial from a sibling. That emotional buffer can preserve family relationships for the long life of the trust.
The cost is real. Corporate trustees typically charge annual fees calculated as a percentage of trust assets, often in the range of 0.5% to 2.0%, with higher rates for smaller portfolios or more complex administration. On a $5 million trust, that is roughly $25,000 to $100,000 a year. For larger SLATs the professional management often justifies the expense; for smaller ones, the fee can take a meaningful bite out of growth.
Co-Trustee Arrangements
The most common SLAT structure uses co-trustees, pairing the beneficiary spouse with an independent trustee. This gives the family a seat at the table while preserving distribution flexibility that the beneficiary spouse acting alone would lose.
When an independent co-trustee holds the distribution power, distributions are not confined to the HEMS standard. The independent trustee can authorize distributions for purposes well beyond health, education, maintenance, and support, because the power is held by someone who is not a beneficiary.5Charles Schwab. SLATs – An Estate-Planning Strategy for Couples The trust document typically grants broader discretion to the independent trustee while restricting the beneficiary spouse’s self-distribution authority to HEMS.
The independent co-trustee has to be genuinely independent. Someone who always defers to the grantor’s wishes does not provide the legal separation the structure depends on. For that reason, some families pair the beneficiary spouse with a corporate co-trustee rather than a friend or relative who might feel social pressure to go along.
Removing and Replacing a Trustee
A well-drafted SLAT includes a mechanism for replacing a trustee who is not working out. Under Revenue Ruling 95-58, the grantor can retain the power to remove and replace a trustee without triggering estate inclusion, provided the replacement is not a related or subordinate party as defined by the tax code.6American Bar Association. How to Avoid Having a Trustee’s Powers Attributed to the Donor The grantor cannot fire the current trustee and install their own child, employee, or the beneficiary spouse as the sole replacement. The successor must come from outside the grantor’s circle of influence.
The same caution applies when the beneficiary spouse holds a removal power. If the beneficiary can remove the trustee and appoint anyone, including themselves, the trustee’s discretionary powers are attributed to the beneficiary. That attribution can create a general power of appointment and cause estate inclusion.6American Bar Association. How to Avoid Having a Trustee’s Powers Attributed to the Donor The drafting fix is to limit the beneficiary’s replacement power to trustees who are not related or subordinate to the grantor and who have no beneficial interest in the trust.
A separate role called a trust protector often appears in SLATs. The trust protector is not a trustee and does not manage day-to-day administration. They hold enumerated powers such as changing the governing jurisdiction, removing and replacing trustees, modifying distribution standards, or correcting drafting errors. Most practitioners name someone who is not a beneficiary, not related or subordinate to the grantor, and not the grantor’s estate planning attorney.
Successor Trustees
A SLAT can run for decades, through the beneficiary spouse’s lifetime and sometimes into the next generation. The original trustee may become unable or unwilling to serve long before the trust ends. Every SLAT should name at least one successor trustee and spell out a process for appointing further successors if needed.
The criteria for a successor mirror the original choice. They need to be independent enough to avoid tax problems, financially capable, and willing to take on fiduciary duties. A common pattern is to name an individual trustee first for the personal touch and designate a corporate trustee as the backup, so professional management is available if the individual can no longer serve.
The grantor’s death is the most predictable transition point. If the beneficiary spouse already serves as co-trustee alongside an independent trustee, the independent trustee simply continues. If the trust relies on a single trustee who dies or becomes incapacitated, the successor provisions decide who steps in. Leaving the question to a court petition is an avoidable cost and delay, and it is the easiest piece of trustee planning to get right at the drafting stage.