Spousal access trusts: Efficient tax planning without completely letting go

November 18, 2025
BBH Senior Wealth Planners Ali Hutchinson and Stacia Kroetz look at spousal lifetime trusts – an estate planning strategy that may be the right fit for individuals who wish to transfer assets to others during life, but who also want to maintain access to the funds.
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When you die, there are three places your property can go: your family,1 charity, or the government.

For those who are not charitably inclined, property is divided between family and the government. Most Brown Brothers Harriman (BBH) clients prefer to maximize the amount they pass to family by minimizing the total estate tax due to the government. The best way to help accomplish this goal is to take advantage of the exemption amount, which is the amount every U.S. person can transfer to other individuals free of estate and gift tax.

The exemption amount is at an all-time high: As of January 1, 2026, a person can transfer up to $15 million free of estate and gift tax. Transfers over the exemption amount are subject to 40% federal tax. The exemption amount may be used by making a gift during life or, if not used while alive, is available as an estate tax credit after death.

Using the exemption amount during life vs. after death

There are several advantages to using the exemption amount during life as opposed to waiting to use it as an estate tax credit, including the following:

If you give the exemption amount while alive, any appreciation from the transfer date until your death is also free of estate tax. For example, if you transfer $15 million to your family,2 and that $15 million doubles in value by the time you pass away, you have effectively transferred twice as much to your family – free of estate tax. If, instead, you waited to take advantage of the exemption in your estate, just $15 million3 would be sheltered from the 40% tax. In this case, any appreciation accruing from the date you would have made the gift until your date of death would be subject to estate tax and therefore split 60-40 between your family and the government.

Another benefit to making transfers early as opposed to waiting until death is that you are around to see your gift affect the family. Many standard estate plans provide that assets pass to the surviving spouse, and then to children. Given increasing life expectancies, frequently at least one spouse lives to his/her 90s, which means that children who receive inheritances (as opposed to lifetime gifts) do not have access to the family nest egg until they are at or past retirement age.

Transferring a percentage of the family’s assets to children in their 30s or 40s can allow you to provide a financial cushion so that your descendants feel comfortable engaging in professions they enjoy but that aren’t necessarily financially remunerative. Even for children who choose high-paying professions, receiving family assets can provide flexibility and open options that may otherwise have felt unattainable – for example, paying for private school for grandchildren or maxing out the proportion of their own salaries that they transfer to a retirement accounts.

Many offspring who receive lifetime gifts feel more comfortable maxing out contributions to 401(k) and IRA accounts armed with the knowledge that should an emergency arise, they will not have to withdraw funds from tax-sheltered retirement accounts – withdrawals that generally incur a penalty if made prior to age 59.5 – but instead can come from family trusts.

Further, while alive, you can start by transferring a relatively small amount to your children and use the gift as a catalyst for frank discussions about appropriate asset allocation and risk tolerance as well as the family’s values and goals. This initial transfer will also allow you to gauge how responsible your children are and their level of preparedness to receive more significant wealth. After observing how some children respond to relatively small transfers, many individuals decide to make future transfers in trust, as opposed to outright.

Through our wealth planning experience at BBH, we have found that in some cases, children who inherit large sums with no preparation or structure and no sense as to what the money is “for” can feel woefully unprepared and at times behave more like lottery winners than responsible stewards of a family’s nest egg.

Choosing a spousal access trust

Even armed with all of the reasons why it may be more logical to transfer assets during life as opposed to through your estate, it can be difficult to come to grips with letting go of such a significant amount while still facing an unknown future that might include healthcare costs, long-term care, a failed family business, market volatility, and other unforeseeable expenses.

If you understand the value in transferring funds while alive, as opposed to waiting until death, but are concerned about an uncertain future and the possibility of transferring too much, you may wish to consider setting up one or two spousal access trusts.

How does it work?

A spousal access trust is an estate planning strategy that allows you to make a transfer during life and still potentially access the funds should there be a need. The strategy involves creating a trust, the beneficiaries of which would be your spouse and descendants.

After setting up the trust, you would transfer up to $15 million into the trust account tax free. Depending on your level of comfort, you could start slowly by transferring less than the full exemption amount, or you could transfer the full amount upfront. Following the gift, all income and appreciation on the gifted property (to the extent not distributed to your spouse) would be out of your estate, but you would still have indirect access to the gifted property because your spouse could withdraw trust funds (and place them back in your joint bank account) if necessary.

Here are two examples of possible scenarios for using a spousal access trust:

During your spouse’s lifetime, the trust could be for her primary benefit, and the trustees would have full discretion to distribute income and principal to her – or if she is adequately cared for, to your children and/or grandchildren. Your spouse could have the annual right to withdraw 5% of the principal of the trust and even have a testamentary power of appointment – that is, the right to appoint at her death the property of the trust to a specified class of persons (for example, “my descendants”).

If your spouse does not exercise the power, when she passes away the property and all appreciation from the date of transfer until her death will pass to or for the benefit of the children and/or grandchildren free of transfer tax.

You could also create one trust for your spouse’s benefit, and your spouse could create a similar trust for yours. If you each transfer the full exemption amount on or after January 1, 2026, a total of $30 million would be transferred out of the estate tax system and excluded from your estates at death. In order for this strategy to be effective, the trusts cannot be identical, because trusts that are interrelated and leave the grantors in approximately the same economic position may be uncrossed for estate tax purposes and includible in each of your estates.

Accordingly, the provisions of a trust created by your spouse would differ slightly from yours. For example, your spouse could create a trust for the benefit of you and your descendants providing that the trustees have full discretion to distribute income and principal among you and your children and/or grandchildren, as opposed to primarily for your benefit. Through this, you could have the right to withdraw income and principal for your support. At your death, you would not have a power of appointment, and the property would simply pass to or for the benefit of children and/or grandchildren.

Note that these provisions are only examples, and the trusts would be designed to fit within your desires and objectives. In order to maintain even more control, you and your spouse may each be a trustee of the other’s trust; however, you would need to also name independent co-trustees.

Access and use

If you use up your exemption in making transfers to a trust like this, the trust fund should be the last place you and your spouse look for living expenses. Ideally, neither one of you would access the funds during life, allowing the maximum amount of property to pass to your descendants transfer tax-free.

And of course, one issue with a spousal access trust is that once you or your spouse passes away, the survivor would no longer have “access” to the trust created for the deceased spouse’s benefit.4 At the death of the spouse, the trust would continue for the benefit of descendants, who could continue to receive distributions in the discretion of the trustee.

While it is extremely rare for parents to transfer more than they can afford, we have seen grateful children take distributions and use the funds to help mom or dad with various expenses. The downside of this approach is that if the expenses are significant, it is basically “reverse” estate planning, where children are transferring assets up to parents as opposed to down to their descendants, something they are generally happy to do where the original funds came from the very parents they are being asked to support.

Benefits of a spousal access trust

Spousal access trusts have several advantages when it comes to tax savings:

  • They are structured as “grantor trusts” for income tax purposes. This means that the trust assets would be considered to be owned by you for income tax purposes, and any transactions between you and the trust would be disregarded from an income tax perspective. This means you could swap assets between your personal account and the spousal access trust and could buy and sell assets from and to the trust without realizing gains. Further, you would pay any income tax generated by trust assets, which effectively transfers more money from you to your family outside of the transfer tax system; in effect, you would be making an additional tax-free gift to the beneficiaries in the amount of any income tax you pay on the trust’s behalf.
  • They can be “toggled off.” If you begin to feel uncomfortable with the amount of income tax you are paying on behalf of the trust, you may decide to “toggle off” the grantor trust and force the trust to begin paying its own way, another technique for slowing the transfer of assets from you to the next generation.

Many clients are comfortable sticking with more straightforward estate planning techniques, all of which continue to be viable and effective. However, for those who want to make lifetime transfers but are concerned about outliving their wealth, a spousal access trust may be a technique to discuss further with an estate planning attorney, BBH wealth planner, or relationship manager.

Neither Brown Brothers Harriman, its affiliates, nor its financial professionals render tax or legal advice. Please consult with an attorney, accountant and/or tax advisor for advice concerning your particular circumstances.

The views expressed in this material are those of the author and may or may not be consistent with the views of Brown Brothers Harriman & Co. and its subsidiaries and affiliates (“BBH”), and are intended for informational purposes only.

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1 Many people also leave assets to friends and other unrelated parties. This article uses the term “family” to refer to any individual (noncharitable) beneficiaries of one’s estate.

2 On or after January 1, 2026.

3 The One Big Beautiful Bill Act made this exemption permanent, with annual inflation adjustments scheduled to begin in 2027.

4In 2022, Florida introduced legislation providing that after the death of the spouse-beneficiary of a spousal access trust, the original spouse-grantor may benefit from the trust. This is a novel concept, and it remains to be seen how such trusts will be treated for federal tax purposes.

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