Spousal Lifetime Access Trust (SLAT)

How it works

One spouse, the donor, transfers assets into an irrevocable trust naming the other spouse, and usually the couple's descendants, as beneficiaries. The transfer is a completed gift: the donor relinquishes dominion and control, which is the test Treasury Regulation 25.2511-2(b) applies. From that point the asset and every dollar it appreciates afterward sit outside the donor's gross estate.

The freeze is not the distinctive part, since any irrevocable trust produces one. What is distinctive is that the donor's household keeps practical access to what it just gave away, and that the access is indirect rather than retained. The donor holds no beneficial interest and none of the retained strings Sections 2036 through 2038 use to pull a trust back into an estate. What the household gets, it gets because the trustee can distribute income and principal to the beneficiary spouse. While the marriage lasts and that spouse lives, those dollars stay available to the couple as a unit even though the corpus and its growth sit outside both estates.

Why grantor-trust status happens by itself here

Section 677(a) treats the grantor as owner of any trust whose income may, without an adverse party's consent, be distributed to the grantor or the grantor's spouse, accumulated for future distribution to either, or applied to premiums on either's life insurance, where that discretion belongs to the grantor or a nonadverse party. In practice the nonadverse party is the trustee, so a trust built to let a trustee distribute to the beneficiary spouse trips the provision automatically. The donor reports the trust's income, deductions and credits on a personal Form 1040 under Section 671, and the trust pays no income tax. Revenue Ruling 2004-64 confirms the donor's payment of that tax from personal funds is not an additional gift to the beneficiaries, so the trust compounds without the drag of its own tax bill while the donor's estate shrinks each year by the tax paid.

Grantor status is a feature here for the same reason it is a feature of an intentionally defective grantor trust. What differs is the trigger. A spousal access trust is defective under 677(a) because the beneficiary spouse can receive distributions, so it needs no swap power to get there, though many are drafted with one anyway for basis-management flexibility. An intentionally defective grantor trust is usually made defective under Section 675(4)(C), a substitution power, precisely so it can hold S corporation stock or work with an unrelated, non-spouse beneficiary group that 677(a) would not otherwise reach.

What this is worth in Florida

Florida levies no tax on the income of natural persons and no estate or inheritance tax, so the tax analysis is entirely federal. What Florida changes is the creditor side. It has no self-settled asset protection trust statute, and Florida Statutes Section 736.0505(1)(b) lets a creditor of an irrevocable trust's settlor reach the maximum amount a trustee could distribute to or for that settlor's own benefit. Because the donor spouse is never a beneficiary of the trust that spouse created, a properly drafted spousal access trust falls outside that rule. It is one of the few ways a Florida resident keeps indirect household access to gifted wealth while the wealth stays beyond a creditor's reach.

Who this applies to

The gate is not income or entity structure. It is marriage, and a donor able to part with the asset for good.

• The donor profile. Any married donor spouse, citizen or resident, whose estate is at or near the exemption, or who wants future appreciation off the family balance sheet while a spouse can still reach the money if needed. The federal basic exclusion amount is $15,000,000 per individual for 2026, and $30,000,000 for a married couple only if it is actually claimed: reaching it takes either both spouses making their own transfers, or the survivor electing portability of the deceased spousal unused exclusion. Section 2010(c)(5)(A) allows no DSUE at all unless the first spouse's executor files an estate tax return computing it and makes the election on that return. Families lose half the exemption by inaction here, not by planning badly. The figure is set under Section 2010(c)(3)(A) as amended by the 2025 federal tax law that made it permanent instead of letting it fall to roughly $7,000,000. It is inflation-indexed after 2026 off a 2025 base year under 2010(c)(3)(B). The 2025 figure was $13,990,000, and the top transfer-tax rate is 40 percent under Section 2001(c).
• A donor willing and able to give the asset up entirely. Nothing here lets the donor keep a string. The access runs only through the other spouse, so it is contingent on the marriage continuing and on that spouse living.
• A beneficiary spouse whose powers stay inside the boundary. A standard limited to health, education, support or maintenance, the ascertainable standard of Section 2041(b)(1)(A), or one left to trustee discretion, is not a general power of appointment. A lifetime or testamentary power exercisable in that spouse's own favor, or in favor of that spouse's estate or creditors, is one under Section 2041(b)(1).
• Both spouses wanting trusts. Mirror-image trusts are a common request, and carry a risk a single trust does not: the reciprocal trust doctrine, below.

The funding gift is reported on Form 709 and draws on the same unified exemption that lifetime gifting draws on, so whatever goes into the trust is no longer available for anything else.

What it requires

Several conditions have to hold at once, each doing structural work. Missing one either breaks the freeze or leaves the trust in somebody's estate anyway.

• An irrevocable trust and a genuinely completed gift. Dominion and control relinquished under Treasury Regulation 25.2511-2(b), with none of the retained interests or powers Sections 2036 and 2038 catch.
• A donor who is neither a beneficiary nor the trustee over discretionary distributions. An independent trustee handles those, and ideally that trustee is not the beneficiary spouse either, so there is no room to argue the donor kept an implied benefit.
• A gift tax return for the funding year. Form 709 is required by Section 6019 and due April 15 of the following year under Section 6075(b). For anything not marketable, a qualified appraisal meeting the adequate-disclosure rule of Treasury Regulation 301.6501(c)-1(f) starts the three-year statute on the valuation.
• A tax reimbursement clause that is discretionary, if there is one at all. A trustee obligation to reimburse the donor for income tax causes estate inclusion under Section 2036(a)(1); a merely discretionary power does not. That is Situation 2 against Situation 3 of Revenue Ruling 2004-64. Florida Statutes Section 736.0505(1)(c) separately confirms a discretionary power does not, by itself, expose the trust to the donor's creditors.
• A beneficiary definition that survives a divorce. Florida's automatic revocation statute does not reach a trust interest, so the document has to do that work: a floating definition meaning whoever the donor is married to at the time, or an independent trust protector able to remove a beneficiary.
• Differentiation, if the other spouse is funding a trust too. Terms, funding, timing and trustees have to differ enough that the two trusts are not one arrangement run twice.
• Separate title on whatever gets funded. Property held as tenancy by the entireties is protected from either spouse's individual creditors under Florida law, which the Florida Supreme Court set out in Beal Bank, SSB v. Almand and Associates. A completed gift by one spouse alone requires separate title, so entireties property has to be severed into the donor's sole name first, and the severance gives up that shield on the asset.
• A hard look before any homestead goes in. Florida's forced-sale exemption and the restriction on devising a homestead away from a surviving spouse or minor child both sit in Article X, Section 4 of the Florida Constitution, and Section 4(c) expressly permits the owner, joined by a spouse where there is one, to alienate homestead by gift during life. Doing so ends homestead status, forfeiting the forced-sale protection and generally the ad valorem exemption.

What you need to document

The instrument does the drafting work. The surrounding file is what shows the arrangement was in fact what the document said it was.

The instrument's distribution standard and powers

The language creating the beneficiary spouse's standard and any power of appointment, drawn to the boundary of Section 2041(b)(1)(A), or a record showing a broader power was a conscious decision.

The gift tax return and the valuation behind it

Form 709 for the funding year, plus the qualified appraisal supporting the reported value of anything not marketable.

Evidence the transfer was complete

Retitling records showing the asset actually moved and the donor gave up dominion and control. Where entireties property was severed to make the gift possible, keep the record of when and why, since the severance is a separate transaction from the gift.

The differentiation file, where both spouses funded trusts

What differs between the two trusts and why: beneficiary classes or distribution standards, funding assets, amounts and sources, creation dates, trustees and situs where feasible, plus documented independent, non-tax reasons for each trust's terms.

How the income tax was actually paid

Records showing the donor paid the trust's income tax from personal funds and, where a reimbursement clause exists, trustee records showing any reimbursement was discretionary rather than automatic.

Where it goes wrong

What goes wrong here goes wrong in the drafting, and in the facts arranged around it.

The reciprocal trust doctrine

The biggest planning risk unique to the his-and-hers version, and it comes from United States v. Estate of Grace. Where both spouses create trusts for each other on materially identical terms, funding and timing, the IRS can invoke the doctrine to uncross them, treating each spouse as the effective beneficiary of the trust that spouse nominally created, which reintroduces a retained life estate and drags the full value back into that spouse's gross estate under Section 2036(a)(1). It applies where the trusts are interrelated and the arrangement leaves each settlor, to the extent of mutual value, in approximately the same economic position as if each had simply named himself or herself life beneficiary of his or her own trust. The Court expressly rejected any requirement of a quid-pro-quo exchange or a tax-avoidance motive, so the test is objective. Estate of Levy v. Commissioner shows that a genuine, substantive difference can be enough: giving one spouse's trust a lifetime power of appointment the other's lacked gave the two trusts different objective value, and that defeated the reciprocity argument.

Inclusion in the donor's estate from a bad draft

The general irrevocable-trust failure mode rather than anything peculiar to spousal access. Any retained possession, enjoyment or right to income, retained control over who benefits, a reversion exceeding five percent, or a retained power to alter, amend or revoke pulls the full date-of-death value back into the donor's estate. The donor must never be able to reach the trust, including through an informal understanding.

A general power of appointment in the beneficiary spouse

A distinct trap, and one that lands in the other estate. A power past the ascertainable-standard exception of Section 2041(b)(1)(A) puts the trust's value in the beneficiary spouse's gross estate at that spouse's death, unless it lapses inside the five-and-five safe harbor of Section 2041(b)(2): the greater of $5,000 or five percent of trust value in the year of lapse, mirrored on the gift-tax side by Section 2514(e). The broader power is sometimes granted deliberately, trading exposure in the beneficiary spouse's often smaller, exemption-rich estate for a basis step-up under Section 1014. On purpose it is a legitimate design; by accident it gives away the freeze.

Leaning on anti-clawback

Treasury Regulation 20.2010-1(c) does real work, but only within limits: if the basic exclusion amount is lower on the donor's date of death than when a completed gift was made, the estate still gets credit computed on the higher amount used at the time of the gift. A 2022 proposed regulation would have added a carve-out denying that protection for gifts that end up includible in the gross estate anyway; as of the regulation text I last read, 26 CFR 20.2010-1(c)(3) is still marked "[Reserved]", so it has not been finalized. Either way the rule protects only the credit computation for a transfer that stays genuinely completed and out of the estate. It rescues nothing pulled back in under Sections 2036 through 2038 or under the reciprocal trust doctrine.

Divorce, death, and basis

• Divorce. Florida Statutes Section 732.703 revokes an ex-spouse's beneficiary designation automatically, but only for the assets its subsection (3) lists, and an irrevocable trust interest is not among them. Without a floating-spouse definition or a trust protector able to remove a beneficiary, an ex-spouse remains a lifetime beneficiary after the marriage ends.
• The beneficiary spouse predeceasing the donor. The household's indirect access ends permanently, and the donor can never step into the beneficiary role of that same trust without causing inclusion under Section 2036. Florida Statutes Section 736.0505(3) offers a narrow mitigation: after the beneficiary spouse's death, assets attributable to a trust of this type, as that statute defines it, are deemed contributed by the deceased spouse rather than the original donor in a successor trust, for purposes of Florida's self-settled-trust creditor rule. That answers the state-law creditor question only, and says nothing about the separate federal question of whether the donor's later interest in a vehicle traceable to the donor's own gift would be treated as a retained interest or a reciprocal arrangement. It is advanced, fact-specific, and needs dedicated estate-planning counsel.
• No step-up in basis. Assets keep the donor's original basis under Section 1015 for as long as they stay outside anyone's includible estate, with no step-up at the donor's death absent a deliberate general-power-of-appointment trigger. Weigh that income-tax cost against the 40 percent estate tax the freeze avoids on future appreciation. I cover the other side of it under basis step-up planning.

A properly drafted spousal lifetime access trust is mainstream, well-settled irrevocable-trust planning, not a listed or reportable transaction. The reciprocal trust doctrine and the general-power-of-appointment boundary are the two traps unique to the spousal access design, and both are manageable with careful, documented drafting.

A situation where this comes up

The fit is a married couple holding something that will keep appreciating and unwilling to lose access to it entirely. One spouse holds the asset separately, the other is named lifetime beneficiary under a health, education, support and maintenance standard with an independent trustee, and the children take the remainder.

Two of the questions here are about title rather than drafting. Where the asset sits in a tenancy by the entireties, the severance has to happen first, be documented as its own event, and be understood as giving up a creditor protection before anybody signs. Homestead is the other, and my usual answer there is to leave the residence out.

The version that worries me is the pair of trusts drawn up in one sitting, funded the same week with the same asset in the same amount, on matching terms with the same trustee. That is the arrangement Grace describes, and creation dates, funding sources and asset classes are all settled the day the trusts are signed. The divorce language is worth settling at the same time.