SLAT — Spousal Lifetime Access Trust
A legal structure that permanently moves assets out of your taxable estate while preserving your spouse's ability to receive money from those assets — protecting millions from estate tax without completely giving up access to the funds.
When you die, the federal government taxes your estate at 40% on everything above $15 million per person. If your estate is worth $20 million, that is a potential $2 million estate tax bill. If it grows to $30 million by the time you die, the bill could be $6 million or more. Most of that growth happens automatically — appreciation on real estate, investments, and business equity that you did not spend and did not give away.
The most direct solution is to give assets away while you are alive — removing them from your estate before the tax applies. But most people are not willing to simply give away $5 million or $10 million with no strings attached. What if you need that money someday? What if something goes wrong financially?
The SLAT solves this exact problem. You transfer assets to an irrevocable trust — they legally leave your estate — but you name your spouse as the person who can receive money from that trust. Since you share a household, expenses, and finances with your spouse, your family still has practical access to those funds even though they are legally outside your estate and permanently protected from estate tax.
Step 1: An irrevocable trust is created. "Irrevocable" means you cannot take it back. This is the legal requirement for removing assets from your estate — if you could revoke the trust and take the assets back, the IRS would still count them as yours.
Step 2: Your spouse is named as the beneficiary. The trust document states that your spouse can receive distributions for health, education, maintenance, and general support. These categories are broad — in practice, the trustee can distribute money for almost any reasonable household need.
Step 3: You transfer assets into the trust. Investment accounts, real estate interests, business equity — whatever you choose. Once transferred, those assets belong to the trust, not to you.
Step 4: The assets grow completely outside your estate. Put in $5 million today, and it grows to $9 million over 10 years — that entire $9 million is outside your estate. The $4 million of growth was never yours to be taxed at death.
Step 5: Your spouse can request distributions from the trustee as needed. If your spouse needs $50,000 for a renovation, medical bills, or simply living expenses, the trustee can distribute it from the trust. Your household financial picture remains largely intact — the legal ownership has simply moved to a protected structure.
SLATs are structured as "grantor trusts" — which means you pay income taxes on whatever the trust earns, even though you receive nothing from it. If the trust earns $200,000 in dividends and gains this year, you pay the tax on $200,000 on your personal return.
This sounds like a burden. It is actually a significant additional benefit. Every dollar of income tax you pay on the trust's earnings is an additional transfer of wealth out of your estate — free of federal income tax when requirements are met. You are shrinking your estate by paying those taxes, while the trust grows without being reduced by them. Over 20 years, these annual "invisible" payments can add millions to the trust's value beyond the original contribution.
Each person has a $15 million lifetime gift and estate tax exemption. A married couple combined has $30 million available. Using two SLATs — one created by each spouse, each naming the other as beneficiary — deploys both exemptions.
Husband creates SLAT #1, naming wife as beneficiary. Wife creates SLAT #2, naming husband as beneficiary. Each trust uses that spouse's $15 million exemption. Together, $30 million — plus all future appreciation on every dollar inside both trusts — is permanently outside the estate.
Important: the two trusts must have meaningful differences in their terms — different trustees, slightly different distribution standards, different funding dates — to avoid the IRS's "reciprocal trust doctrine," which would collapse both trusts and put everything back in both estates. Your estate attorney handles this in the drafting.
- Assets transferred into the SLAT are removed from your taxable estate — including all future appreciation. Transfer $5M today, it grows to $20M — none of that $20M is subject to estate tax at your death.
- No gift tax owed on the transfer — it uses your $15M lifetime exemption. You are not writing a check to the IRS. You are simply using the exemption the law gives you.
- Every year you pay income tax on the trust's earnings, you are making an additional tax-free transfer into the trust. This "grantor tax benefit" can add millions to the trust over time.
- Both spouses can create SLATs — $30M combined sheltered, plus all future appreciation on those assets, permanently outside both estates.
- Assets inside the trust are protected from your personal creditors — meaning a lawsuit or judgment against you personally cannot reach the SLAT assets.
- If assets inside the SLAT appreciate significantly, that entire appreciated value passes to your children or other beneficiaries at your death completely free of estate tax.
- You pay income tax on the trust's earnings every year — dividends, interest, capital gains inside the SLAT appear on your personal tax return even though you received none of that money. This is the cost of grantor trust status (and also the hidden benefit).
- A gift tax return (Form 709) must be filed the year you fund the SLAT, even though no gift tax is owed. This documents the transfer and starts the IRS statute of limitations.
- The transfer uses your $15M lifetime exemption. This coordinates with other estate planning — we model the overall plan so the exemption is used in the most efficient sequence.
- If your spouse dies before you, your indirect access to that SLAT ends. The trust continues for other named beneficiaries (typically your children), but your spouse is no longer there to receive distributions on your behalf.
- If you divorce, same result — access ends. The SLAT is not the right tool for every marriage situation. We discuss this candidly in the planning conversation.
- The transfer is permanent and irrevocable. You cannot change your mind, dissolve the trust, or reclaim the assets if your circumstances change dramatically.
We model the tax and estate impact before anything is signed
Before any attorney is engaged or documents are drafted, we model exactly what the SLAT accomplishes for your specific numbers — how much estate tax is avoided, what the projected trust value looks like in 10 and 20 years, how much lifetime exemption is consumed and what remains, and how this interacts with your other assets. You see real numbers specific to your situation before you commit to anything. If the analysis shows the SLAT is not the right tool for your circumstances, we say so.
Shurek — before any external costs are incurredYour estate attorney drafts the SLAT trust document
The SLAT is a legal document — an irrevocable trust agreement that must be drafted by a licensed estate planning attorney. We cannot draft it (that would be unauthorized practice of law), but we provide the attorney with precise tax parameters: the trust must be a grantor trust for income tax purposes (specific provisions required), the distribution standard for your spouse (health, education, maintenance, and support is standard), trustee selection requirements, and — if you are doing dual SLATs — the specific ways the two trusts must differ to avoid the reciprocal trust doctrine. We review the draft to confirm it achieves the intended tax treatment before anything is signed.
Estate attorney drafts — Shurek provides tax parameters and reviewsSelect and engage an independent trustee
You cannot serve as trustee of your own SLAT — that would give you retained control over assets you have supposedly transferred away, and the IRS would pull them back into your estate. Your spouse can be a co-trustee in some structures but generally cannot be the sole trustee. Options include a trusted family friend, your estate attorney, a professional trustee, or a corporate trust company. We help identify appropriate candidates and explain what to look for. The trustee's ongoing job is to manage the trust's investments and decide whether to approve distribution requests from your spouse.
Joint decision — Shurek provides guidance and candidate optionsTransfer the assets into the trust
Once the trust document is executed and the trustee is in place, the selected assets are transferred into the trust. For investment and brokerage accounts, the custodian (Fidelity, Schwab, Vanguard, etc.) retitles the account into the name of the trust — a routine process that takes a few days and requires the trust document as supporting paperwork. For real estate interests or LLC membership interests, a deed transfer or operating agreement amendment is required. We coordinate this entire process with the custodians to make sure it is executed correctly and that all transfer documentation is complete and properly recorded.
Coordinated by Shurek — executed by custodians, and attorneys for real propertyWe prepare and file the Form 709 gift tax return
The transfer to the SLAT is a taxable gift — even though no gift tax is owed because it is covered by your $15M lifetime exemption. A Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return must be filed for the calendar year in which you fund the SLAT. This return documents the transfer in detail, reports the value of assets transferred, and records the lifetime exemption used. Most critically, it must include "adequate disclosure" — a complete description of the transferred property, the basis for the reported value, and the relationship between you and the trust. Without adequate disclosure, the three-year statute of limitations on IRS challenge of the transfer's value never starts. We prepare this return with full adequate disclosure every time.
Shurek — filed by April 15 of the following year (extension available to October 15)Annual income tax reporting begins immediately
Starting in the first full year after funding, the SLAT's income must be reported on your personal Form 1040. Every dividend, every interest payment, every capital gain realized inside the trust appears on your return as if you still owned the assets directly. A grantor trust statement is attached to your return each year listing all the trust's income items and where they appear on the 1040. No separate trust income tax return (Form 1041) is filed while the trust is a grantor trust during your lifetime — the trust's activity runs through your personal return. We prepare the grantor trust statement and integrate all of this into your annual return. This is an ongoing annual responsibility that continues for the life of the trust.
Shurek — annually, as part of your personal income tax return| Form | Name | When Due | What It Does and Why It Matters |
|---|---|---|---|
| 709 | United States Gift Tax Return | April 15 of the year after funding (extension to October 15 available) | Required in the year you fund the SLAT. This is one of the most strategically important returns we prepare. It documents exactly what was transferred, the fair market value at the time, the lifetime exemption consumed, and the "adequate disclosure" description that starts the three-year statute of limitations on IRS challenge. Without this return, the IRS can challenge the transfer value indefinitely. With proper adequate disclosure, that window closes after three years. |
| 1040 + Grantor Trust Statement | Individual Income Tax Return with SLAT grantor trust attachment | April 15 annually (extension to October 15 available) | Every year during your lifetime, the trust's income runs through your personal return. Dividends, interest, and capital gains earned inside the SLAT appear on your 1040 as if you still owned the assets directly. A grantor trust statement is attached each year identifying which income items came from the SLAT. No separate trust return is required while you are alive and the trust maintains grantor trust status. We prepare this statement and incorporate it seamlessly into your annual return. |
| 1041 | U.S. Income Tax Return for Estates and Trusts | April 15 annually after your death (extension to September 30) | After you die, the SLAT converts from a grantor trust (reported on your return) to a non-grantor trust (it files its own return). From that point, the trust files Form 1041 every year. Trust income is taxed at compressed trust brackets — the 37% top rate applies at just $15,650 of trust income in 2026. This often makes it advantageous to distribute income to beneficiaries who are taxed at lower rates. We prepare the 1041 and advise the trustee on distribution strategy each year. |
| Schedule K-1 (Form 1041) | Beneficiary's Share of Income, Deductions, and Credits | Issued by April 15 annually with the Form 1041 | After your death, when the trust distributes income to your spouse or other beneficiaries, each recipient receives a Schedule K-1 reporting their share of the trust's income, deductions, and credits. They report this on their personal returns at their individual tax rates. We prepare the K-1s as part of the annual Form 1041 preparation — each beneficiary receives their K-1 before the tax filing deadline. |
| 709 (subsequent years) | Gift Tax Return — additional contributions | If additional assets are contributed to the SLAT in future years | Most SLATs are funded once at establishment. If additional assets are transferred into the trust in subsequent years — to take advantage of remaining lifetime exemption or to shelter assets that have become available — a new Form 709 documents each additional contribution. Each transfer requires its own adequate disclosure and exemption allocation. |
Before the SLAT is created: Tax and estate impact modeling with your specific numbers. Determining how much to transfer, which assets are best suited, how the SLAT interacts with your other planning. Providing the estate attorney with exact tax parameters the trust document must satisfy.
During setup: Reviewing the draft trust document to confirm it achieves the intended income tax treatment. Coordinating the asset transfer with your custodians. Preparing the Form 709 gift tax return with complete adequate disclosure.
Every year after setup: Preparing your Form 1040 with the grantor trust statement and all SLAT income. Monitoring the trust's tax status. Answering tax questions for the trustee. After your death: preparing the annual Form 1041 trust return and all Schedule K-1s for beneficiaries.
Drafting the trust document. This is a legal instrument that only a licensed attorney can create. We provide the parameters; the attorney drafts and executes the legal document. The quality of this drafting directly affects the trust's effectiveness and IRS defensibility.
Deed and title work if real estate or partnership interests are being transferred into the SLAT — these require legal title work in the relevant jurisdiction.
Trustee coordination on appointment procedures, resignation and succession planning, and any trust modifications that require court involvement.
Sign the trust document and the asset transfer paperwork. Approve the strategy after reviewing our modeling — no one should sign an irrevocable document without understanding exactly what it does and what it costs in terms of lifetime exemption and ongoing income taxes. Choose who serves as trustee (we help identify candidates and explain what to look for).
Ongoing: Make sure your spouse understands they can request distributions from the trustee when needed — and what the distribution standard covers. The trust only functions as intended if it is actually used. Beyond that, you live your life — the ongoing tax compliance and trust monitoring are our responsibility.
The SLAT is one of the most powerful estate planning structures available — but it requires consistent ongoing compliance to remain defensible and effective. Here is every date that matters, year after year.
SLAT Income Reporting
We prepare your Form 1040 with the grantor trust statement attached. Every dividend, interest payment, and capital gain generated inside the SLAT appears on your personal return. We handle this entirely — no separate action required from you. Your tax payment on the trust's earnings constitutes an additional annual tax-free transfer into the trust.
Form 1040 Due (Extension Available to Oct 15)
Personal income tax return with grantor trust statement. This is where the SLAT's income tax cost — and the hidden gifting benefit — is documented each year. Extensions are available but estimated taxes must be paid by April 15.
Form 709 Gift Tax Return Due
Filed in the year you funded the SLAT. Documents the transfer, the value of assets, the exemption consumed, and — critically — the adequate disclosure that starts the 3-year IRS statute of limitations. This is the most strategically important filing in the entire SLAT setup. Extensions available to October 15.
Trustee Distribution Decisions
Your spouse contacts the trustee when distributions are needed — home expenses, health costs, living expenses. The trustee reviews each request against the HEMS standard and documents the decision. We advise the trustee on the tax characterization of any distributions. No fixed calendar date — this is event-driven throughout the year.
Grantor Trust Status Review
We review annually that the trust's grantor trust status is being properly maintained — the specific provisions that cause grantor trust treatment must remain in place and operative. Any proposed changes to the trust structure are reviewed for their impact on this status before implementation.
Trust Converts to Non-Grantor — Form 1041 Begins
When you die, the SLAT converts from grantor trust (reported on your 1040) to non-grantor trust (files its own Form 1041). Annual trust returns begin. We transition the compliance from your personal return to the trust return. K-1s are issued to beneficiaries who receive distributions.