A spousal lifetime access trust (SLAT) is an irrevocable trust that one spouse funds for the benefit of the other, using the federal lifetime gift exemption to move assets and their future growth out of the taxable estate while the beneficiary spouse can still receive distributions. It is one approach families use to lock in the historically high exemption before circumstances or the law change.
A spousal lifetime access trust lets one spouse gift assets into an irrevocable trust for the other, removing those assets and their appreciation from both spouses’ estates while preserving indirect access through distributions to the beneficiary spouse. In 2026 the federal basic exclusion amount is $15,000,000 per individual (Source: IRS, 2026 inflation adjustments; Rev. Proc. 2025-32).
What a spousal lifetime access trust is
A spousal lifetime access trust is an irrevocable trust that one spouse (the donor) creates and funds for the benefit of the other spouse (the beneficiary). The completed gift uses the donor’s lifetime gift exemption, so the transferred assets and any later appreciation may sit outside both spouses’ taxable estates, while the beneficiary spouse can receive trust distributions during life.
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The design tries to balance two goals that usually conflict: removing wealth from the estate for transfer-tax purposes, and keeping a household within reach of the money if it is needed later. Because the beneficiary spouse can receive distributions, the couple retains indirect access as long as the marriage continues and both spouses are living.
A SLAT is most often discussed by families whose combined net worth may approach or exceed the federal exemption. For a broader view of how much a couple can shelter and the 2026 numbers behind it, see our companion overview of the 2026 estate tax exemption.
How much can a SLAT shelter in 2026?
In 2026 the federal basic exclusion amount is $15,000,000 per individual, up from $13,990,000 for 2025 decedents (Source: IRS, “IRS releases tax inflation adjustments for tax year 2026”; Rev. Proc. 2025-32). A married couple may therefore shelter up to $30,000,000 combined (two individual exemptions), and a gift to a SLAT draws against the donor spouse’s share of that exemption (Source: IRS, “IRS releases tax inflation adjustments for tax year 2026”; Morgan Lewis, “IRS Announces Increased Gift and Estate Tax Exemption Amounts for 2026,” Oct. 2025).
The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025 as Public Law 119-21, amended IRC 2010(c)(3) to set the 2026 basic exclusion amount at $15,000,000 and made the higher exemption permanent, indexed for inflation, rather than allowing the scheduled post-2025 reversion to roughly half (Source: IRS, “What’s New: Estate and Gift Tax”; H.R.1, 119th Congress). The top federal estate and gift tax rate remains 40% (Source: EveryCRSReport IF13053; IRS IRM 4.25.6).
Because the higher exemption is now permanent, the older “use it or lose it before 2026” urgency has eased. The rules still allow a spouse to lock large amounts of appreciation out of the estate now, and any growth after the gift generally accrues outside the taxable estate.
| Federal transfer-tax figure | 2025 | 2026 |
|---|---|---|
| Basic exclusion amount (per individual) | $13,990,000 | $15,000,000 |
| Combined exemption (married couple, two individual exemptions) | $27,980,000 | $30,000,000 |
| Annual gift tax exclusion (per donee) | $19,000 | $19,000 |
| Annual exclusion, gift to noncitizen spouse | $190,000 | $194,000 |
| GST exemption (per individual) | $13,990,000 | $15,000,000 |
| Top estate/gift/GST rate | 40% | 40% |
How a SLAT works step by step
A SLAT works by converting a lifetime gift into an irrevocable trust that benefits the other spouse, so the assets leave the donor’s estate while the household keeps indirect access. The mechanics center on a completed gift, an independent trustee, and careful drafting so the trust is not pulled back into either estate.
- The donor spouse creates an irrevocable trust naming the other spouse as a lifetime beneficiary, often with children or descendants as remainder beneficiaries.
- The donor transfers assets into the trust as a completed gift, using part of the donor’s lifetime gift exemption ($15,000,000 per individual in 2026, per IRS/Rev. Proc. 2025-32).
- The donor reports the gift on IRS Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return (Source: IRS, About Form 709; 2025 Instructions for Form 709).
- A trustee, frequently an independent party, manages the assets and can make distributions to the beneficiary spouse under the trust’s standards.
- During the marriage, the couple may benefit indirectly because distributions to the beneficiary spouse can support the household.
- At the beneficiary spouse’s death, remaining assets typically pass to the remainder beneficiaries outside the taxable estate, subject to the trust terms.
A SLAT is deliberately structured so the gift does not qualify for the unlimited marital deduction; qualifying for that deduction would defeat the purpose, because the goal is to use lifetime exemption rather than defer the transfer (Source: IRC 2523; IRC 2056). This is a defining difference from ordinary spousal gifts.
Funding a SLAT: gifts, splitting, and reporting
Funding a SLAT means making a completed gift to the trust and reporting it on Form 709, which draws against the donor spouse’s lifetime exemption. Couples sometimes consider gift-splitting under IRC 2513, but that election has real limits when one spouse is a trust beneficiary, so the funding structure matters.
Gift-splitting lets spouses elect to treat a gift to a third party as made one-half by each, reported on Form 709, and both spouses must consent (Source: IRC 2513; 26 CFR 25.2513-1; IRS 2025 Instructions for Form 709). As a planning point rather than a bright-line IRS rule, gift-splitting is generally unavailable where the donor’s spouse is a beneficiary of the trust and that spouse’s interest is not ascertainable or severable, which is common with SLATs. Practitioners treat this as guidance drawn from IRC 2513 and case law, not a single controlling pronouncement.
The annual gift tax exclusion of $19,000 per donee for 2026 (unchanged from 2025) can apply to certain additions, and gifts to a noncitizen spouse have their own $194,000 annual exclusion for 2026 (Source: IRS 2026 inflation adjustments; Rev. Proc. 2025-32). The unlimited marital deduction does not apply to a noncitizen spouse except through a qualified domestic trust, or QDOT, under IRC 2056A.
The reciprocal trust doctrine: a key risk to understand
The reciprocal trust doctrine is a significant technical consideration when both spouses each create a SLAT for the other. If two SLATs are too similar, the IRS can “uncross” them and treat each spouse as the settlor of the trust beneficiary that same spouse, pulling the value back into the estate.
The controlling authority is United States v. Estate of Grace, 395 U.S. 316 (1969). The Supreme Court applied a two-part test: (1) the trusts are interrelated, and (2) the arrangement, to the extent of mutual value, leaves the settlors in approximately the same economic position as if each had created a trust naming himself or herself as the life beneficiary (Source: Cornell LII, 395 U.S. 316). The Court held that application does not depend on proof that each trust was a quid pro quo for the other, and does not require a tax-avoidance motive.
The consequence matters. If two SLATs are found reciprocal, the trust value can be pulled into the funding spouse’s gross estate under IRC 2036, which includes property a person transferred but retained the enjoyment of or the right to designate who enjoys it (Source: IRC 2036, Cornell LII). That inclusion can defeat the estate-tax benefit the SLATs were meant to create.
Whether two SLATs are treated as mirror images turns on how similar they are. The rules do not set a checklist, so the differences below are illustrative of the kinds of distinctions that appear in the case law and commentary, not a guarantee against IRS challenge.
- Funding the two trusts at different times and with different assets and amounts.
- Using different trustees or distribution standards in each trust.
- Giving one spouse a limited power of appointment the other does not have.
- Naming different remainder beneficiaries or different terms for each trust.
Benefits and trade-offs of a SLAT
The main benefit of a SLAT is removing assets and their future appreciation from the taxable estate while keeping indirect access through the beneficiary spouse; the main trade-offs are irrevocability and the loss of access if the marriage or the beneficiary spouse’s life ends. Weighing both sides is central to deciding whether the structure fits a household.
| Potential benefits | Potential trade-offs and risks |
|---|---|
| Uses the $15M 2026 lifetime exemption to move assets out of the estate (Source: IRS/Rev. Proc. 2025-32). | The trust is irrevocable; the donor spouse generally gives up direct control and ownership. |
| Future appreciation on gifted assets generally grows outside the taxable estate. | Divorce can end the household’s indirect access, since the beneficiary is a spouse. |
| Indirect access remains while the marriage continues and the beneficiary spouse is living. | Death of the beneficiary spouse can cut off the access route to trust distributions. |
| Can be paired with GST planning for multi-generational goals (GST exemption $15M in 2026). | The reciprocal trust doctrine can cause estate inclusion under IRC 2036 (Estate of Grace, 395 U.S. 316). |
| May coordinate with other retirement-tax moves such as a Roth conversion. | Gift-splitting is often unavailable when a spouse is a beneficiary (planning point under IRC 2513). |
Because a SLAT interacts with income taxes, retirement accounts, and Medicare surcharges, families often review it alongside related items such as the net investment income tax and Medicare IRMAA brackets. The right fit can depend on net worth, marital stability, and liquidity needs.
SLATs, portability, and the GST tax
A SLAT uses lifetime exemption during life, while portability lets a surviving spouse use a deceased spouse’s unused exemption after death; the two are different tools that can be coordinated. For families with multi-generational goals, the generation-skipping transfer (GST) tax also comes into play.
Portability of the Deceased Spousal Unused Exclusion (DSUE) allows a surviving spouse to use the last deceased spouse’s unused exclusion, elected by timely filing Form 706 for the first spouse to die even when no return is otherwise required (Source: IRS estate FAQ; 26 CFR 25.2505-2). Portability does not apply to the GST exemption, which covers only estate and gift exemption.
The GST exemption tracks the basic exclusion amount, reaching $15,000,000 in 2026 and made permanent by P.L. 119-21, with a flat 40% GST rate (Source: EveryCRSReport IF13053; IRC Chapter 13). A SLAT intended to benefit grandchildren or later generations, sometimes called a dynasty SLAT, generally needs GST exemption allocated on Form 709 to keep those later transfers out of the transfer-tax base.
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Frequently asked questions
What is a spousal lifetime access trust in simple terms?
A spousal lifetime access trust is an irrevocable trust one spouse funds for the other, using lifetime gift exemption to move assets and their future growth out of the taxable estate while the beneficiary spouse can still receive distributions. In 2026 the exemption is $15,000,000 per individual (Source: IRS 2026 inflation adjustments; Rev. Proc. 2025-32).
Can both spouses set up a SLAT for each other?
Both spouses can each create a SLAT, but if the two trusts are too similar the reciprocal trust doctrine can apply. Under United States v. Estate of Grace, 395 U.S. 316 (1969), interrelated trusts that leave the settlors in about the same economic position can be uncrossed, causing estate inclusion under IRC 2036 (Source: Cornell LII).
Does a SLAT use the lifetime gift exemption?
Yes. A gift to a SLAT is a completed gift that draws against the donor spouse’s lifetime exemption, which is $15,000,000 per individual in 2026 (Source: IRS/Rev. Proc. 2025-32). The gift is reported on IRS Form 709, and it is structured so it does not qualify for the unlimited marital deduction (Source: IRS About Form 709; IRC 2523).
What happens to a SLAT if the couple divorces?
A SLAT is irrevocable, so divorce generally does not undo the trust, but it can end the household’s indirect access because the beneficiary is a spouse. After divorce, distributions may continue to the former spouse under the trust terms. Marital stability is one factor that bears on how a SLAT functions over time (Source: general SLAT structure; IRC 2036 context).
Is the higher exemption still going away after 2025?
No. The One Big Beautiful Bill Act, signed July 4, 2025 as Public Law 119-21, amended IRC 2010(c)(3) to set the 2026 basic exclusion amount at $15,000,000 and made the higher exemption permanent, indexed for inflation, instead of the scheduled reversion to roughly half (Source: IRS “What’s New: Estate and Gift Tax”; H.R.1, 119th Congress).
Can a SLAT benefit a noncitizen spouse?
A SLAT can name a noncitizen spouse, but the unlimited marital deduction does not apply to a noncitizen spouse except through a qualified domestic trust (QDOT) under IRC 2056A. For 2026, the annual exclusion for gifts to a noncitizen spouse is $194,000, up from $190,000 in 2025 (Source: IRS 2026 inflation adjustments; Rev. Proc. 2025-32; IRC 2056A).
Sources
IRS, “IRS releases tax inflation adjustments for tax year 2026” (Rev. Proc. 2025-32): https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
Rev. Proc. 2025-32 (full text): https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
IRS, “What’s New: Estate and Gift Tax”: https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
Morgan Lewis, “IRS Announces Increased Gift and Estate Tax Exemption Amounts for 2026” (Oct. 2025): https://www.morganlewis.com/pubs/2025/10/irs-announces-increased-gift-and-estate-tax-exemption-amounts-for-2026
IRS, Frequently Asked Questions on Estate Taxes: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes
H.R.1, 119th Congress (OBBBA, P.L. 119-21): https://www.congress.gov/bill/119th-congress/house-bill/1
United States v. Estate of Grace, 395 U.S. 316 (1969): https://www.law.cornell.edu/supremecourt/text/395/316
IRC 2036: https://www.law.cornell.edu/uscode/text/26/subtitle-B
IRC 2513 (gift-splitting): https://www.law.cornell.edu/uscode/text/26/2513 ; 26 CFR 25.2513-1: https://www.law.cornell.edu/cfr/text/26/25.2513-1
IRC 2523: https://www.law.cornell.edu/uscode/text/26/2523 ; IRC 2056: https://www.law.cornell.edu/uscode/text/26/2056
IRS, About Form 709: https://www.irs.gov/forms-pubs/about-form-709 ; 2025 Instructions: https://www.irs.gov/instructions/i709
26 CFR 25.2505-2 (DSUE portability): https://www.law.cornell.edu/cfr/text/26/25.2505-2
EveryCRSReport IF13053 (GST tax): https://www.everycrsreport.com/reports/IF13053.html ; IRC Chapter 13: https://www.law.cornell.edu/uscode/text/26/subtitle-B/chapter-13
