Spousal Lifetime Access Trust (SLAT)

What Is It?

A spousal lifetime access trust (SLAT) is an irrevocable trust benefiting the donor’s spouse and children. Through a SLAT, a donor may reduce a spouse’s exposure to estate taxes at death by taking advantage of the gift tax exemption. In 2015 the applicable federal exclusion amount for gifts is $5,530,000. (IRS, What’s New-Estate and Gift Tax last updated Jan. 8, 2015) The donor must provide beneficiaries with access to the funds by either giving the spouse a Crummey power or directing the trustee to pay the spouse income for life. Additionally, the donor may provide other distribution directions as he/she sees fit.

With a SLAT, the donor may gift away money or an interest in a non-voting limited liability, closely held business stock, or partnership interest during his/her lifetime to take advantage of the gift tax exclusion while potentially maintaining access to the funds. As long as the donor and spouse remain married, the trust assets are still available to the family unit such as the donor can indirectly enjoy the assets that are no longer part of his/her taxable gross estate. If the spouse dies before the donor, however, the donor will no longer have indirect access to the funds.

A donor may further leverage a LLC or partnership by taking advantage of valuation discounts. It is also important to note that with a SLAT, the donor is still responsible for income taxes on capital gains.

Potential Issue: Reciprocal Trust Doctrine

To reduce exposure to estate taxes, both spouses may create a SLAT for the benefit of the other spouse, thus ultimately gifting away $10 million to benefit the next generation. When this is done, both spouses need to be aware that some courts have considered this to result in a reciprocal trust. When a court finds a reciprocal trust exists, each spouse’s $5 million is treated as being a trust created for that spouse’s own benefit and is thus included in each donor’s gross estate.

If a couple wants to try and reduce the probability of a court finding a reciprocal trust, the couple should make the two trusts different. Typically, this can be done by either creating the trusts at different times or providing different trustees, rights, beneficiaries, and/or powers in the trusts.

Who Can Use It?

A SLAT may be used by anyone who has the funds to create an irrevocable trust.

Which Laws Primarily Govern It in Minnesota?

Minnesota Estate Tax

The Minnesota Taxable Estate provision, Minnesota Statutes section 291.016, provides that “the Minnesota taxable estate equals the federal taxable estate as provided under section 2051 of the Internal Revenue Code” with additions and subtractions discussed further in the statute.

Additions: Subdivision 2(3), which provides “the aggregate amount of taxable gifts as defined in section 2503 of the Internal Revenue Code, made by the decedent within three years of the date of death. . . exclud[ing] any value of the gift included in the federal estate” must be “added in computing the Minnesota taxable estate.”

Subtractions: Subdivision 3(2) provides that “the result of $5,000,000 minus the amount for the year of death listed in clauses (1) to (5), whichever is less, may be subtracted in computing the Minnesota taxable estate but must not reduce the Minnesota taxable estate to less than zero.” As provided in (2), the amount of subtraction for “estates of decedents dying in 2015” is $1,400,000.

Minnesota Gift Tax

Minnesota does not have a gift tax, as Chapter 292 of Minnesota Statutes has been repealed.


Minnesota Statutes section 291.03 provides additional information on determining the rates of the taxable estate.


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