What Is a SLAT and Is It Right for Your Estate Plan?
Richard N. Sayer, Esq.
Sayer Regan & Thayer, LLP
A Spousal Lifetime Access Trust can move millions out of your taxable estate while your spouse retains access to those assets. That’s a powerful combination, but it comes with real strings attached.
What You’ll Learn
- How a Spousal Lifetime Access Trust is structured
- Why married couples use it as an estate tax reduction strategy
- How a spouse can still benefit from assets that are technically no longer yours
- Specific circumstances where a SLAT makes good sense, the risks that can unravel one
- How a reciprocal trust problem can turn a well-planned strategy into a taxable mess
How a SLAT Works
A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust that one spouse creates for the benefit of the other. The spouse who establishes the trust (the donor spouse) transfers assets into it, typically using their federal gift and estate tax exemption to avoid an immediate tax bill. Those assets now belong to the trust, not to either spouse personally. For estate tax purposes, they’re out of the picture.
Here’s where the strategy earns its name. The other spouse (the beneficiary spouse) can still receive distributions from the trust during their lifetime. Income. Principal. Support for living expenses, education, healthcare, whatever the trust document allows. The donor spouse doesn’t receive distributions directly, but if the couple shares finances, the practical effect is that the household still benefits from those assets.
It’s a bit like putting money in a lockbox and handing the key to your spouse. You no longer own the lockbox, but your spouse does, and you two share a mortgage.
The trust can also benefit children or grandchildren, either alongside the beneficiary spouse or after the spouse’s death, depending on how it’s drafted. That flexibility makes SLATs a useful tool not just for reducing estate taxes but also for multigenerational planning.
To make a SLAT work, the transfer into the trust must use the donor spouse’s lifetime gift and estate tax exemption. As of January 1, 2026, that exemption is $15 million per individual, thanks to the One Big Beautiful Bill Act. That’s a lot of room to work with, and unlike the prior rules, this higher exemption is now permanent, with annual inflation adjustments built in. That said, “permanent” only means until Congress decides otherwise, so married couples in Rhode Island, Massachusetts, and Connecticut still have good reason to take a hard look at SLATs sooner rather than later.
When a SLAT Makes Sense
Not every couple needs a SLAT. If your combined estate is well below the federal exemption threshold, you have bigger priorities than estate tax planning. But if your estate is approaching or exceeding the exemption amount, and especially if you want to take advantage of the current elevated exemption before it potentially shrinks, a SLAT can be worth serious consideration.
The ideal candidate for a SLAT is a married couple with a stable marriage, a meaningful estate, and some tolerance for complexity. That last part is honest rather than discouraging. SLATs aren’t administratively difficult once they’re established, but they require thoughtful drafting, careful funding, and an understanding of what you’re agreeing to before you sign anything.
SLATs also make sense when the couple has assets they’d like to put to work inside the trust. Appreciating assets, in particular, benefit from being moved out of the taxable estate early. If you transfer an investment account or a business interest worth $3 million today and it grows to $5 million by the time of your death, all of that growth happens outside your estate. You’ve removed not just the original value but all the future appreciation from the calculation.
What Can Go Wrong
This is the part of the SLAT conversation that gets skipped too quickly, so let’s give it the attention it deserves.
The reciprocal trust doctrine.
If both spouses create SLATs for each other at roughly the same time, with similar terms and similar asset values, the IRS may collapse both trusts under the reciprocal trust doctrine. The theory is that the two trusts effectively cancel each other out, restoring each spouse to the economic position they’d be in without any trust at all. The result: both trusts are pulled back into the taxable estate, defeating the entire purpose. To avoid this problem, SLATs established by both spouses must differ meaningfully in terms of timing and funding.
Divorce.
When a marriage ends, the beneficiary spouse retains their interest in the trust. The donor spouse gets nothing back. There’s no built-in mechanism to recapture those assets. For couples with strong marriages who never contemplate divorce, this may feel like a distant concern. It’s still worth understanding because an irrevocable trust means exactly what it says.
Death of the beneficiary spouse.
If the beneficiary spouse dies first, the donor spouse loses all indirect access to those trust assets (assuming the children or other beneficiaries inherit the remainder). The household income the couple was effectively drawing on from the trust is now gone. Proper planning accounts for this scenario, often by ensuring the couple has sufficient assets held outside the trust to sustain the surviving donor spouse.
Loss of the marital deduction.
Transfers into a SLAT don’t qualify for the unlimited marital deduction because the trust, not the spouse, owns the assets. That means you’re using your gift tax exemption. If you’ve already used much of that exemption or plan to make other large gifts, the math needs to account for it.
Administrative requirements.
An irrevocable trust needs its own tax ID, bank and investment accounts, and annual tax filings. The trustee (who should not be the donor spouse) has fiduciary obligations. These aren’t insurmountable requirements, but they’re real ones.
SLATs in Rhode Island, Massachusetts, and Connecticut
Clients across Rhode Island, Massachusetts, and Connecticut operate under a mix of federal and state-level considerations. As noted above, Massachusetts has a $2 million estate tax exemption, making estate planning more urgent for a broader range of families than the federal threshold alone would suggest. Rhode Island’s estate tax exemption is higher (currently around $1.7 million, adjusted for inflation), and Connecticut has its own set of rules.
What that means practically is that a SLAT designed for a Massachusetts client may be structured differently than one for a Connecticut client, even if the underlying federal strategy is the same. State tax exposure, residency, and asset location all factor in. This is another reason why SLAT planning is best done with attorneys who know the specific landscape in these states, rather than a template-driven approach.
Sayer, Regan & Thayer focuses on estate planning for clients throughout Rhode Island, Massachusetts, and Connecticut. We don’t treat SLATs as a one-size answer. We look at the full picture of your estate, family dynamics, assets, and goals before recommending any strategy.
Is a SLAT Right for You?
If you’re a married couple with a taxable estate and want to protect assets from estate taxes while maintaining some financial flexibility for the household, a SLAT is worth a serious conversation. It’s not the right tool for every situation, and it’s not something you want to set up without a clear understanding of the trade-offs.
The exemption sunset creates a genuine planning window. Acting thoughtfully before that window closes, rather than either rushing or waiting too long, is exactly the kind of decision that estate planning counsel exists to help you make.
If you’d like to explore whether a SLAT fits your situation, the attorneys at Sayer, Regan & Thayer are ready to talk through the specifics with you.
Contact Sayer, Regan & Thayer for more information on this topic.
The information in this article is for general educational purposes and does not constitute legal advice. Estate planning law is fact-specific and changes frequently. Consult a qualified estate planning attorney about your individual situation.
Frequently Asked Questions
What assets can be transferred into a SLAT?
Most types of assets can be used to fund an SLAT, including cash, investment accounts, real estate, and business interests. Appreciating assets are often the most strategic choice because they remove not just current value but all future growth from the taxable estate. The right choice depends on your overall estate plan and tax situation.
Can both spouses create SLATs for each other?
Yes, but it requires careful planning to avoid the reciprocal trust doctrine. If two SLATs mirror each other too closely in structure, timing, and value, the IRS may treat them as offsetting and pull both back into the taxable estate. Making the trusts meaningfully different in terms and timing is essential, and that drafting work requires experienced estate planning counsel.
What happens to a SLAT if we divorce?
The beneficiary spouse keeps their interest in the trust. The donor spouse cannot reclaim the assets transferred into it. This is one of the fundamental trade-offs of using an irrevocable trust structure, and it’s a factor worth weighing honestly before moving forward.
Does a SLAT protect assets from creditors?
It can provide some creditor protection because the assets are no longer owned by either spouse individually. However, the level of protection depends on how the trust is drafted, state law in Rhode Island, Massachusetts, or Connecticut, and whether the transfer could be challenged as fraudulent. A SLAT is primarily an estate tax planning tool, and any asset protection benefits are secondary considerations that need to be evaluated separately.