Groundwater inundation due to sea level rise can affect island and coastal freshwater resources by exposing water tables to direct, continuous evaporation. Numerical simulations of groundwater inundation effects on coastal and island aquifers have been limited by an inability to simulate solute transport and variable density flow between the aquifer and lakes formed by groundwater inundation. Consequently, we contributed to the development of a new tool, the Lake Transport Package, for MODFLOW 6 that can calculate solute concentrations within lakes and allows for variable density flow between lakes and aquifers. Here we use groundwater inundation as an example application to showcase the functionality of the Lake Transport Package and the advantages of using this tool over past methods of representing groundwater inundation. We developed hypothetical island simulations based on hydrogeological characteristics of the Bahamas. Multiple sea level rise and lake evaporation rates were simulated to evaluate the effects of groundwater inundation on freshwater lens size for different climates. The results demonstrate the ability of the Lake Transport Package to calculate the solute concentration of the lake for transient simulations, including hypersaline concentrations. Higher sea level rise and greater lake evaporation rates lead to a greater loss of the freshwater lens and higher lake salinity. The formation of a lake and corresponding expansion due to groundwater inundation increases the loss of freshwater by 6–36%, depending on the lake evaporation rate. These simulations validate the performance and demonstrate usefulness of the Lake Transport Package as a tool in representing groundwater inundation.