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Estate & Legacy

Spousal Lifetime Access Trusts (SLATs): Benefits and Risks

A SLAT is an irrevocable trust one spouse funds for the other, moving assets and growth out of the estate while the family keeps indirect access.

Spousal Lifetime Access Trusts (SLATs): Benefits and Risks

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What is a SLAT?

  • A spousal lifetime access trust is an irrevocable trust one spouse creates and funds for the benefit of the other spouse, and often children.
  • The gift uses the donor spouse's lifetime exemption, $15 million per person in 2026.
  • Assets and their future growth are generally excluded from both spouses' taxable estates.
  • The beneficiary spouse can receive distributions, which gives the couple indirect access.
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Full Guide

What is a SLAT?

  • A spousal lifetime access trust is an irrevocable trust one spouse creates and funds for the benefit of the other spouse, and often children.
  • The gift uses the donor spouse's lifetime exemption, $15 million per person in 2026.
  • Assets and their future growth are generally excluded from both spouses' taxable estates.
  • The beneficiary spouse can receive distributions, which gives the couple indirect access.

Why use a SLAT now?

  • The One Big Beautiful Bill Act set a $15 million per-person basic exclusion in 2026, indexed after that, with no scheduled drop.
  • Treasury regulations provide that gifts made under a higher exemption won't be taxed later if the exemption falls.
  • A SLAT moves future appreciation out of the estate while preserving some family access, which an outright gift to children does not.

How does indirect access work?

  • The trustee can make distributions to the beneficiary spouse, commonly under a health, education, maintenance, and support standard.
  • SLATs are usually grantor trusts, so the donor spouse pays the income tax on trust earnings.
  • Assets in a SLAT don't receive a basis step-up at the donor's death, per Rev. Rul. 2023-2.

What is the reciprocal trust doctrine?

  • If each spouse creates a substantially identical trust for the other, courts can uncross them and include each trust in its creator's estate.
  • Couples who each create a SLAT typically vary timing, assets, terms, and beneficiaries.
  • The doctrine comes from the Supreme Court's 1969 Grace decision.

What are the main risks?

  • Divorce: unless the trust defines the spouse as whoever the donor is married to, the ex-spouse may keep benefits while the donor loses indirect access.
  • Death of the beneficiary spouse ends the couple's access, though the trust continues for other beneficiaries.
  • In community property states such as California, funding a SLAT with separate property is important, which may require a transmutation agreement.
  • The trust is irrevocable, so sizing it too large can squeeze the couple's own finances.

Key takeaways

  • A SLAT moves assets and growth out of the estate while preserving indirect spousal access.
  • Grantor-trust status means the donor pays income tax, and there is no step-up at the donor's death.
  • Divorce, death, reciprocal-trust, and community property issues need attention before funding.
  • Rubric coordinates SLAT planning with your estate attorney and CPA; confirm the design with them.
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Generation-Skipping Trusts and the GST Tax in 2026

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