Spousal Lifetime Access Trust (SLAT) Attorney in Austin, TX

Spousal Lifetime Access Trusts (SLATs) for Austin Families

A spousal lifetime access trust (SLAT) is one of the most popular ways for married couples to use their federal gift and estate tax exemption while they are alive, without giving up access to the money entirely. One spouse gives assets to an irrevocable trust for the other spouse and the children, and the assets and all of their future growth stay out of both spouses’ taxable estates.

Reviewed by Turner Henington, attorney and former KPMG tax accountant, Texas Bar No. 24148206 · Updated November 2026

How a SLAT Works

• The donor spouse makes a gift of cash, investments, business interests or real estate to the trust and reports it on a federal gift tax return (Form 709). The gift is sheltered by the donor’s lifetime exemption (26 U.S.C. § 2010).
• The beneficiary spouse can receive distributions, often limited to health, education, maintenance and support so the beneficiary spouse can also serve as trustee without the trust being pulled into their estate.
• Children and grandchildren are the remainder beneficiaries. After the beneficiary spouse dies, the trust can continue for descendants, including as a long-term dynasty trust.
• The donor usually pays the income tax. Because the donor’s spouse can benefit, the SLAT is generally a “grantor trust” for income tax purposes (26 U.S.C. § 677). The donor pays the tax on trust income, which lets the trust grow faster and further reduces the donor’s estate, without any additional gift.

The Texas Community Property Step

Texas is a community property state, so most assets acquired during marriage belong half to each spouse. If a SLAT is funded with community property, the beneficiary spouse is treated as having contributed half of it, which can cause that half to be included in the beneficiary spouse’s estate. For that reason, Texas couples usually sign a partition agreement first, converting the assets to be gifted into the donor spouse’s separate property (Tex. Fam. Code § 4.102). We prepare the partition agreement and the trust together.

Two SLATs? Watch the Reciprocal Trust Doctrine

Many couples want each spouse to create a SLAT for the other. If the two trusts are substantially identical and leave both spouses in the same economic position, the IRS can “uncross” them and include each trust in the estate of the spouse it benefits (United States v. Estate of Grace, 395 U.S. 316 (1969)). We design the two trusts to differ in meaningful ways, such as timing, funding, beneficiaries, trustees and distribution powers.

Risks to Plan For

• Divorce. The trust is irrevocable. We often define the beneficiary as the donor’s current spouse, so a former spouse stops benefiting after a divorce.
• Death of the beneficiary spouse. When the beneficiary spouse dies, the donor loses indirect access. Some couples pair the SLAT with life insurance or keep enough assets outside the trust.
• No step-up in basis. Assets given during life keep the donor’s tax basis (26 U.S.C. § 1015) instead of receiving a new basis at death (26 U.S.C. § 1014). Cash and assets with high basis or strong expected growth are usually the best gifts.
• The gift is permanent. Only assets the couple will not need for their own lifestyle should go into a SLAT.

SLAT Compared With Keeping the Assets

Treasury regulations protect exemption used for lifetime gifts if the exemption is later reduced (Treas. Reg. § 20.2010-1(c)), which is one reason families with larger estates use SLATs now rather than waiting.

How We Help

We start with a free consultation and an estate tax projection, then draft the partition agreement, the SLAT and the funding documents, coordinate the gift tax return with your CPA, and update your revocable trust and will so the whole plan works together. See also lifetime gifting strategies and the estate tax planning overview.

Why Work With Us

• Tax background. Turner Henington is a former KPMG tax accountant, so we design trusts with both the estate tax and your family’s income tax in mind.
• We work with your CPA and advisor. Marital and bypass trust decisions often happen after a death, on the estate tax return, so we coordinate with the people who prepare it.
• Flat-fee quotes. After a free consultation, you get a written flat-fee quote before any work starts.
• We also handle the first death. Funding these trusts and making the elections is part of settling the estate, and we handle both the planning and the administration.

Talk to an Estate Tax Planning Attorney

Call (512) 737-8404, book a free consultation, or send us a message below.

What Our Clients Say

Spousal Lifetime Access Trust (SLAT) FAQ

Can my spouse be the trustee of our SLAT?

Yes. The beneficiary spouse can usually serve as trustee if distributions to them are limited to health, education, maintenance and support. Broader powers are given to an independent trustee.

Does a SLAT make sense if our estate is under the exemption?

Usually not for estate tax reasons alone. SLATs are most useful for married couples whose combined estate, including expected growth, could exceed $30 million, or who want trust protection for their children.

What happens to a SLAT in a divorce?

The trust is irrevocable and is not undone by a divorce. Many SLATs define the beneficiary as the donor’s current spouse, so a former spouse no longer benefits after a divorce.

Other Estate Tax Planning Tools

• Estate tax planning in Austin: overview
• Bypass (credit shelter) trust
• Marital trust
• QTIP trust
• Reverse QTIP election
• Irrevocable life insurance trust (ILIT)
• Dynasty trust and GST planning
• Disclaimer trust
• Grantor retained annuity trust (GRAT)
• Charitable remainder and lead trusts
• Portability: keeping a deceased spouse’s unused exemption
• Lifetime gifting in Texas

This page is general information, not tax or legal advice for your situation. Reading it does not create an attorney-client relationship.