A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust that allows one spouse to use their lifetime gift tax exemption to move assets out of the taxable estate — while the other spouse can still indirectly benefit from those assets during their lifetime. It is one of the most popular estate planning strategies for high-net-worth married couples who want to lock in the current elevated gift tax exemptions before they potentially sunset.
Why SLATs Are Popular Right Now
The federal lifetime gift and estate tax exemption is $13.99 million per individual in 2026 ($27.98 million for a married couple). However, under current law, this elevated exemption is scheduled to sunset after December 31, 2025, reverting to roughly half that amount. Legislative activity around the sunsetting provision has created urgency: high-net-worth couples are using SLATs now to lock in gifts at the higher exemption level before it potentially expires.
How a SLAT Works
- Spouse A (the grantor) creates an irrevocable trust naming Spouse B as the primary beneficiary, with children and grandchildren as secondary beneficiaries.
- Spouse A funds the trust with assets — cash, securities, real estate — using part or all of their lifetime gift tax exemption. Because this is a completed gift to an irrevocable trust, those assets leave Spouse A’s taxable estate.
- Spouse B (and often children) can receive distributions from the trust for health, education, maintenance, and support. Since Spouse A and Spouse B are married and share finances, Spouse A indirectly benefits from the assets even though they are technically no longer in Spouse A’s estate.
- At Spouse B’s death, the remaining trust assets pass to children or other beneficiaries outside both spouses’ taxable estates.
The Key Benefit: Access Without Estate Inclusion
The elegance of a SLAT is that Spouse A can give away assets using a large exemption amount — removing them from the taxable estate permanently — while still having indirect access to those assets through Spouse B. If structured properly, the IRS does not include those assets in Spouse A’s estate at death.
The Reciprocal Trust Doctrine: A Critical Warning
If Spouse A creates a SLAT for Spouse B and Spouse B simultaneously creates an equivalent SLAT for Spouse A, the IRS may invoke the reciprocal trust doctrine — essentially unwinding both trusts and including the assets back in both spouses’ estates. To avoid this, the two SLATs must be meaningfully different in structure, funding amounts, timing, or beneficiary provisions. Most attorneys recommend a gap of 6–12 months between establishing each spouse’s SLAT and ensuring the trusts differ in material ways.
The Divorce or Death Risk
The SLAT’s Achilles heel is the indirect access structure. If Spouse A and Spouse B divorce, Spouse A loses indirect access to the trust assets entirely — the assets remain in the trust for Spouse B’s benefit, outside Spouse A’s control. If Spouse B dies first, Spouse A loses indirect access and must live off other assets.
Some SLATs include provisions allowing Spouse A to name a new beneficiary if Spouse B predeceases, but these provisions must be carefully structured to avoid IRS issues.
SLAT vs. GRAT
- SLAT: Permanent removal of assets from the estate using the lifetime exemption. Indirect access via the beneficiary spouse. Best when you have a large exemption to use and want to provide for a spouse.
- GRAT: A grantor trust that passes the “excess” appreciation to heirs over the IRS hurdle rate. Less dependence on the exemption amount but more sensitive to the interest rate environment and no income access for the grantor’s spouse.
Tax Treatment of SLAT Income
A SLAT is typically structured as a grantor trust, meaning Spouse A (the grantor) pays income tax on all income and gains generated inside the trust. This is actually a feature, not a bug — Spouse A’s tax payments further reduce their taxable estate without being treated as additional gifts, allowing the trust assets to grow tax-free for the beneficiaries.
Who Should Consider a SLAT?
A SLAT is appropriate for married couples with estates above or close to the estate tax exemption threshold who:
- Want to utilize the current high exemption before it potentially sunsets
- Need the funded spouse to retain indirect access to the assets
- Have a stable marriage and can accept the spousal dependency risk
- Have sufficient assets outside the SLAT to fund living expenses if access to the trust is cut off
Bottom Line
A SLAT is a powerful tool for married couples to lock in today’s elevated gift tax exemption and remove assets from the taxable estate while preserving some indirect access. The divorce risk and reciprocal trust doctrine require careful structuring by an estate planning attorney. If the exemption reduction goes through as scheduled, the window for maximizing a SLAT strategy may be narrow — consult an advisor if your estate could be affected.