Spousal Lifetime Access Trust (SLAT) Attorneys
A spousal lifetime access trust lets a married person make a large gift out of the couple’s taxable estate without giving up the family’s ability to reach the money. One spouse creates an irrevocable trust for the benefit of the other spouse and, usually, the children. The assets and their future growth leave the donor’s estate. The beneficiary spouse can receive distributions from the trustee if the family needs them. As long as the marriage lasts, the couple keeps indirect access to what was given away.
SLATs became the workhorse of estate tax planning for married couples because they solve the problem that stops most people from making large gifts: the fear of needing the money later. They also offer creditor protection for the beneficiary spouse, a platform for multigenerational planning, and a way to use the federal exemption while it is available.
Milvidskiy Law Group P.C. designs SLATs for one spouse or both, drafts around the doctrines that can unwind poorly matched trusts, and plans for the two events that most often disrupt a SLAT: divorce and the beneficiary spouse’s death.
Key Takeaways:
- A SLAT removes assets and their growth from the donor’s taxable estate while allowing the donor’s spouse to receive distributions. The couple keeps a door open to the assets without the donor owning them.
- The two structural risks are divorce and the death of the beneficiary spouse. Both end the donor’s indirect access, and both are addressed in the drafting, not after the fact.
- When both spouses create SLATs for each other, the trusts must differ in meaningful ways. Mirror-image trusts can be unwound under the reciprocal trust doctrine and pulled back into both estates.
How a SLAT Works
The gift
The donor spouse transfers assets to an irrevocable trust. The gift uses part of the donor’s lifetime gift and estate tax exemption, which is $15,000,000 per person for 2026 according to the Internal Revenue Service and is indexed for inflation. The assets must be the donor’s own; property held jointly is first divided, and the beneficiary spouse cannot be treated as a co-donor of a trust from which he or she benefits.
The beneficiaries
The trust names the donor’s spouse as a beneficiary, typically alongside children and grandchildren. The trustee may make distributions to the spouse for health, education, maintenance, and support, or under a broader discretionary standard if an independent trustee is used. The donor is not a beneficiary and has no right to distributions. In practice, if the family needs funds, the trustee distributes to the beneficiary spouse, and the household benefits.
Income taxes
Most SLATs are drafted as grantor trusts, so the donor reports the trust’s income and pays the tax personally. That payment is not a gift and lets the trust grow undiminished. A grantor trust also allows the donor to swap assets with the trust at fair value, which is how low-basis assets can be moved back into the donor’s estate before death to receive a step-up in basis. Because assets given to a SLAT keep the donor’s basis, the swap power is a standard feature, not an option.
The Two Risks, and How the Drafting Handles Them
Divorce
If the marriage ends, the former spouse remains a beneficiary unless the document says otherwise, and the donor’s indirect access is gone. The usual answer is a “floating spouse” definition: the beneficiary is whoever is married to the donor at the time, so a former spouse drops out and a future spouse steps in. That provision has its own consequences and is a deliberate choice. The trust can also give an independent trustee or a trust protector the power to remove a beneficiary, and the couple’s marital agreement can address the SLAT directly.
Death of the beneficiary spouse
If the beneficiary spouse dies first, the donor loses indirect access permanently, because the donor cannot be a beneficiary of his or her own trust without estate inclusion. Families manage this in several ways: life insurance on the beneficiary spouse, held inside or outside the trust; a modest reserve kept outside the SLAT in the donor’s own name; and, where both spouses have created trusts, the survivor’s continued access to the other SLAT. The point is to decide before funding how much the couple can afford to place beyond reach in the worst case.
Two SLATs: The Reciprocal Trust Problem
Many couples want each spouse to create a SLAT for the other so that both have access. The Internal Revenue Service and the courts treat two trusts that are essentially mirror images, created at about the same time, as if each spouse had created a trust for himself or herself, which puts the assets back in both estates. Avoiding that result requires the trusts to differ in substance: different beneficiaries or classes of beneficiaries, different distribution standards, different trustees and powers, different funding dates and assets, different powers of appointment. We build the differences into the design rather than hoping the similarities go unnoticed.
Beyond Estate Tax: Protection and Generations
Assets in a properly drafted SLAT are generally protected from the beneficiary spouse’s creditors, because the spouse has no right to compel distributions. They are also protected from the donor’s future creditors once the transfer is complete, subject to the fraudulent transfer rules that apply to any gift; a SLAT is not a vehicle for moving assets away from an existing claim. See our asset protection page for how this fits with other tools.
Because the trust is irrevocable and can last for generations, generation-skipping transfer tax exemption is usually allocated to it at funding. The SLAT then functions as a dynasty trust: after the spouse’s death it continues for children and grandchildren, outside the transfer tax system for as long as state law permits. For a second marriage, the trust can provide for the spouse for life and then direct what remains to the donor’s own children, which addresses one of the central problems in estate planning for blended families.
State Considerations
New York has no gift tax, so funding a SLAT is not taxed by the state, but New York adds taxable gifts made within three years of death back into the estate. New York’s estate tax exclusion is $7,350,000 for deaths in 2026, and its cliff can tax the entire estate once the exclusion is exceeded by a small margin, so a SLAT funded more than three years before death can remove both the assets and the cliff problem. Connecticut taxes lifetime gifts with an exemption equal to the federal amount, $15,000,000 for 2026, so a Connecticut donor’s SLAT gift is reported on a Connecticut return and counts against that exemption. New Jersey has no estate or gift tax, and its inheritance tax does not reach transfers to a spouse or children, which makes a New Jersey SLAT a federal and protection-driven tool.
When a SLAT Is Not the Right Tool
A SLAT is the wrong choice when the marriage is not secure, when the couple cannot afford to place the assets permanently beyond the donor’s reach if the beneficiary spouse dies, or when the combined estate will remain below every applicable threshold and the gift would only sacrifice a basis step-up. A donor who wants to keep the ability to benefit personally should look instead at the self-settled trusts described on our irrevocable trusts page, or at retained-interest techniques covered under tax planning. We say so when a simpler plan will serve.
What Our SLAT Service Includes
- A projection with your CPA and financial adviser of the estate tax exposure, the assets suited to the gift, and the cash flow the couple needs to keep outside the trust.
- Drafting the trust: the beneficiary definitions, the distribution standard, trustee and trust protector powers, the grantor trust and swap provisions, generation-skipping allocation, and the divorce and death provisions.
- For two-SLAT couples, designing the differences that keep the trusts from being treated as reciprocal.
- Dividing jointly held assets and retitling before funding, and coordinating business interests with existing transfer restrictions.
- The gift tax return, generation-skipping exemption allocation, and Connecticut gift tax reporting where applicable.
- Integration with your estate plan, life insurance, and marital agreement, with periodic review through our Client Care Program.
Schedule a SLAT Consultation
If you and your spouse expect a taxable estate and have hesitated to make large gifts because you might need the money, a SLAT is designed for exactly that hesitation. Our attorneys practice in New York, New Jersey, and Connecticut. Contact Milvidskiy Law Group P.C. to schedule a consultation.
This page is provided for general informational purposes only and does not constitute legal advice. Laws differ by state and change over time. Tax figures are as of the date stated and change annually. For advice about your situation, consult a qualified attorney.
Frequently Asked Questions
What is a spousal lifetime access trust?
A SLAT is an irrevocable trust one spouse creates for the benefit of the other spouse and usually the children. The gift removes the assets and their future growth from the donor’s taxable estate, while the beneficiary spouse can receive distributions from the trustee. The couple keeps indirect access to the assets without the donor owning them.
Can I be a beneficiary of my own SLAT?
No. If the donor could benefit from the trust, the assets would generally be pulled back into the donor’s taxable estate. The donor’s access is indirect, through distributions the trustee makes to the beneficiary spouse. That is why the SLAT depends on the marriage continuing and the beneficiary spouse surviving.
What happens to a SLAT if we divorce?
Unless the trust says otherwise, the former spouse remains a beneficiary and the donor loses indirect access. Most SLATs are drafted with a floating spouse clause, under which the beneficiary is whoever is married to the donor at the time, or with a power in an independent trustee or trust protector to remove a beneficiary. The couple’s marital agreement can also address the trust.
What happens if my spouse dies before me?
The trust continues for the remaining beneficiaries, usually the children, and the donor’s indirect access ends permanently. Families plan for this with life insurance on the beneficiary spouse, by keeping an adequate reserve outside the trust, and, where both spouses have created SLATs, through the survivor’s access to the other trust.
Can both spouses create SLATs for each other?
Yes, but the trusts must differ in substance. If two trusts are essentially mirror images created at about the same time, the reciprocal trust doctrine can treat each spouse as having created a trust for himself or herself, which puts the assets back in both estates. Different beneficiaries, standards, trustees, powers, funding dates, and assets are used to keep the trusts distinct.
Who pays the income tax on a SLAT?
Usually the donor. Most SLATs are drafted as grantor trusts, so the donor reports the trust’s income and pays the tax personally. That payment is not a gift and allows the trust to grow without being reduced by taxes. The grantor trust status can generally be turned off later if the donor no longer wants to pay the tax.
Do assets in a SLAT get a step-up in basis when I die?
No. Assets given to the trust keep the donor’s basis. Because the SLAT is a grantor trust, the donor can swap low-basis trust assets for high-basis assets or cash before death, so that the low-basis assets are back in the donor’s estate and receive a step-up. We include that swap power in every SLAT.
Does a SLAT protect assets from creditors?
Generally, yes, for the beneficiary spouse, because the spouse cannot compel distributions and creditors cannot reach what the beneficiary cannot demand. Once the transfer is complete, the assets are also outside the donor’s reach and that of the donor’s future creditors, subject to the fraudulent transfer rules that apply to any gift. A SLAT cannot be used to move assets away from an existing claim.
How does New York's estate tax affect SLAT planning?
New York has no gift tax, so funding a SLAT is not taxed by the state, but taxable gifts made within three years of death are added back to the New York estate. New York’s exclusion is $7,350,000 for 2026, and estates that exceed it by a small margin can lose the exclusion entirely. A SLAT funded well before death removes both the assets and the risk of that cliff.
Is a SLAT the same as a dynasty trust?
A SLAT can be one. When generation-skipping transfer tax exemption is allocated to the trust at funding and the document allows the trust to continue after the spouse’s death for children and grandchildren, the SLAT operates as a dynasty trust for as long as state law permits. Many SLATs are drafted that way from the start.
