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Spousal lifetime access trust (SLAT)
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Depends on youExperts differ; the right answer depends on your situation.
An irrevocable trust one spouse funds for the other, using lifetime exemption while keeping indirect access through the beneficiary spouse.
See it on the Personal Finance & Estate map →How it works
One spouse gifts assets, often investments or LLC interests, to a trust for the other spouse and children. Growth leaves both estates, yet the beneficiary spouse can receive distributions. It is usually a grantor trust, so the donor pays its income tax, which is effectively a further tax-free gift. Risks: divorce or the beneficiary spouse's death cuts off access; mirror-image SLATs by both spouses can be collapsed by the IRS; and gifted assets lose the step-up in basis.
Why it matters for you
Depends on you. Popular while the exemption was set to halve in 2026; with $15 million now in place, it mainly suits estates well above that.
Rules, limits and sources (2026)
IRC Secs. 671–677 (grantor trust rules) and 2036; United States v. Estate of Grace (Supreme Court, 1969) applied the reciprocal-trust doctrine used against mirror SLATs.
Watch out for
How divorce courts treat a SLAT, and whether 'floating spouse' clauses covering a future spouse hold up, are still open questions.
Connections (2)
▸Spousal lifetime access trust (SLAT) is a type of Irrevocable trustStandard practice
How they connect
A SLAT is an irrevocable trust with one special beneficiary: the donor's spouse. Gifts to it use the donor's lifetime exemption and move future growth out of both estates, yet the couple keeps indirect access through distributions to the spouse. It carries every irrevocable-trust trade-off: lost control, no basis step-up, permanence.
When it applies
Widely created in 2020–2025 by couples rushing to use the exemption before the scheduled 2026 cut, which the 2025 law canceled.
How sure?
IRC Sec. 2036, Sec. 2041 and the grantor-trust rules govern estate inclusion; gift-tax returns (Form 709) report the funding.
Watch out for
With $15 million exemptions per person, whether new SLATs still make sense for estates near that level is debated among planners.
▸Community property (California marital property) usually must be split to fund a Spousal lifetime access trust (SLAT)Watch out
How they connect
A SLAT must be funded with the donor spouse's separate property. If community property goes in, the beneficiary spouse is partly funding their own trust, which can pull assets back into their estate. California couples therefore usually sign a transmutation agreement first, converting some community property into each spouse's separate property.
When it applies
Done by California estate attorneys just before funding, with both spouses advised, ideally by separate counsel.
How sure?
California Family Code Sec. 852 requires transmutations in writing; IRC Sec. 2036 creates the estate-inclusion risk.
Watch out for
Transmutation gives up the double step-up on converted assets and can affect divorce rights; both spouses need clear advice before signing.