The SLAT TrapThe SLAT Trap

Spousal lifetime access trusts (SLATs) are an increasingly common estate-planning tool and can serve a variety of important objectives for married clients. However, a grantor may not anticipate, much less welcome, the income tax consequences of a SLAT in the event of divorce. It’s important for estate-planning attorneys to take these issues into account in drafting SLATs or, if that’s not possible, for matrimonial attorneys to address them in divorce negotiations. 

Under current law, an individual can pass an unprecedented $11.7 million (indexed for inflation) (the applicable exclusion amount) free of federal estate and gift tax to anyone, either during life or, to the extent not previously used, at death.¹ On Dec. 31, 2025, the current l...