Boland Law Group, PLLCPassionately Preserving Wealth™
Spousal lifetime access trusts
Spousal lifetime access trust (SLAT) attorneys in Arizona
A spousal lifetime access trust, or SLAT, lets one spouse give assets to an irrevocable trust for the other spouse and the children. The gift uses your federal exemption at today's value, so everything those assets earn from then on grows outside both estates, while your household keeps a line to the money through your spouse. Boland Law Group designs SLATs for Arizona families in Scottsdale, Paradise Valley and across the state, drafts a second trust to be materially different from the first, and publishes its fees.
What a spousal lifetime access trust does
A SLAT is an irrevocable trust that one spouse, the donor, creates and funds for the other spouse, and usually for their children and grandchildren. The transfer is a completed gift. It is reported on a federal gift tax return and uses part of the donor's lifetime exemption, which in 2026 is $15,000,000 per person.
Two things follow. The assets, and all of their future growth, are outside the donor's estate. And because the spouse is a beneficiary rather than the person who gave the assets, they stay outside the spouse's estate too, provided the trust is funded with the donor's separate property and the spouse's powers are limited. The trustee can make distributions to the spouse for health, education, maintenance and support, or more broadly when an independent trustee holds the discretion, so the household keeps indirect access to wealth it has moved out of both estates.
Because the donor's spouse can benefit, a SLAT is usually a grantor trust for income tax under section 677 of the Internal Revenue Code. The donor keeps paying the income tax on what the trust earns, and under Revenue Ruling 2004-64 those payments are not further gifts, so each one moves more value to the family without using more exemption. The trade is basis: assets in the trust get no new cost basis at the donor's death, which is why we draft a power to swap them back.
| Question | Kept in your name | Given to a SLAT |
|---|---|---|
| Counted in your estate? | Yes, at the value on the date of death | No. The gift uses exemption once, at its value on the day it was made |
| Growth after today? | Taxed at 40 per cent above the exemption | Outside both spouses' estates |
| Can the household use it? | Yes, directly | Indirectly, through distributions to your spouse |
| Can you take it back? | Yes | No, the trade for the exclusion |
| New basis at death? | Yes, and on both halves of community property | No, unless swapped back before death |
| Who pays tax on its income? | You do | You still do, which keeps the trust whole and shrinks your estate |
Who uses a SLAT in Arizona
The tax case begins with a married couple whose estate is near the $30,000,000 combined exemption today, or will be. A diversified estate usually grows faster than the exemption is indexed, so a couple at $20 million today can be well over the line at the second death. A SLAT uses exemption now, while the assets are worth less, and moves the growth out.
The second test is comfort. A gift to a SLAT cannot be undone, and the donor gives up direct use of the money. The right amount is what the couple can live without, with the spouse's access as a safety valve rather than a budget. We set that figure with your wealth advisor's cash flow model before anything is signed.
Our clients come to the Scottsdale Airpark office from Paradise Valley, North Scottsdale, Carefree and across the Valley. The families who most often need this page are below.
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Couples near or above $30 million
One or two SLATs use exemption at today's values and move decades of growth outside both estates.
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Owners of closely held companies
Nonvoting interests in a family company, appraised for lack of control and marketability, can fund a SLAT before the company grows.
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Founders before a liquidity event
Shares given before a sale is agreed carry a lower value, and a properly structured non-grantor SLAT can claim its own section 1202 exclusion on qualified small business stock.
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Families planning for grandchildren
With GST exemption allocated, a SLAT continues as a dynasty trust after both spouses die, for as long as Arizona law allows.
How a SLAT is built, from partition to gift tax return
Four stages, in this order. In Arizona the first stage is the one most often skipped, and it decides whether the rest works.
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Separate property is set aside
Community property is divided by a written partition agreement between the spouses, so the donor gives from assets that belong to the donor alone. We recommend independent advice for the other spouse where the amounts warrant it.
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The trust is drafted
We name an independent trustee or limit the spouse's role, set the distribution standard, add the substitution power used to manage basis, plan for divorce and for the spouse's death, and decide whether GST exemption will be allocated.
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The trust is funded
The trust obtains its own tax ID and accounts, and the assets are retitled to it. Interests in a family company or real estate are valued by a qualified appraiser, because the gift tax return will need the appraisal.
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The gift is reported
Your CPA files Form 709 by April 15 of the following year, with adequate disclosure so the IRS's time to challenge the value starts to run. We send the CPA a reporting memorandum on the allocation and gift-splitting position.
Two SLATs, made different on purpose
Many couples want each spouse to fund a SLAT for the other. If the two trusts are substantially alike, the IRS can treat each spouse as having funded a trust for themselves, which puts both trusts back in the estates. The rule is the reciprocal trust doctrine, from United States v. Estate of Grace, a 1969 decision of the Supreme Court. The defense is real, documented difference.
| Feature | Mirror-image pair | Non-reciprocal pair |
|---|---|---|
| Signed and funded | The same day | Months apart, often in different tax years |
| Assets | Equal halves of the same portfolio | Different assets in different amounts |
| Trustee | The same trustee for both | Different trustees with different powers |
| Beneficiaries | The spouse and the children in both | Different classes, such as grandchildren in one only |
| Spouse's powers | Identical | A power of appointment in one trust and not the other |
| Distribution standard | Identical | Health, education, maintenance and support in one, an independent trustee's discretion in the other |
In Estate of Levy, a 1983 Tax Court decision, two trusts were held not to be reciprocal where one spouse held a lifetime power of appointment the other did not. We record each difference, and the reason for it, in the file. The pair is priced as one design engagement on our published schedule.
The annual grantor trust cycle
A SLAT drafted as a grantor trust is disregarded for income tax, so its income is reported on the donor's own return. That is the design, not a flaw: each tax payment the donor makes shrinks the taxable estate and leaves the trust whole. These five steps happen every year, and a well-run SLAT has a file that shows them.
The trust earns income and gains
The trustee invests under the trust's terms and the Arizona Trust Code, in accounts titled to the trust and never mixed with household money.
The income is reported on your return
As a grantor trust, its income, deductions and credits are reported on the donor's federal and Arizona returns, using one of the reporting methods the regulations allow.
You pay the tax from your own funds
Under Revenue Ruling 2004-64 the payment is not a gift. Any power to reimburse you is discretionary, held by an independent trustee, and drafted to the ruling's conditions.
Distributions to your spouse are documented
Payments go to the beneficiary spouse under the trust's standard, by trustee decision, with a record. A pattern that looks like the donor's own account invites the argument that the donor kept the benefit.
Basis is reviewed
We look at whether to swap cash or high-basis assets into the trust for low-basis ones, so those assets can receive a step-up in your estate. Revenue Ruling 2008-22 confirms a properly drafted swap power does not by itself cause inclusion.
A SLAT's grantor status usually follows from the spouse being a beneficiary, so it cannot simply be switched off later. If the income tax may become more than the donor wants to carry, that is settled at the start, with a discretionary reimbursement power or a non-grantor SLAT.
How SLATs fail, and what prevents it
A SLAT gives a married couple more flexibility than any other lifetime gift trust, and that flexibility is where it breaks. These are the mistakes that put the trust back in an estate or strand the family, and the step that prevents each one.
Funding with community property
If community assets fund the trust, the beneficiary spouse is treated as having given half, and that half can be included in the spouse's estate under section 2036. A written partition first, and a clean trail of separate funds, prevents it.
Mirror-image trusts
Two SLATs that match can be uncrossed under Grace, putting both back in the estates. Differences in timing, assets, trustees, beneficiaries and powers are the defense, and they have to be real.
Divorce
A divorce does not undo an irrevocable trust, and for divorce instruments signed after 2018 the donor can stay taxed on the trust's income after the marriage ends, because section 682 was repealed. A floating spouse clause defines the beneficiary as the person the donor is married to at the time.
The beneficiary spouse dies first
The household's access ends with the spouse, although the trust continues for the children. Life insurance on the beneficiary spouse and a funding amount the donor can live without keep the donor from being stranded.
Using the trust as the donor's account
Distributions that pay the donor's own bills, or an understanding that the donor will benefit, support an argument that the donor kept an interest, which brings the trust back under section 2036.
Gift splitting assumed
When the spouse is a beneficiary, the gift generally cannot be split with that spouse except for a part that is ascertainable and severable from the spouse's interest. The return is prepared on that footing, under Treas. Reg. § 25.2513-1(b)(4).
Values nobody can support
A closely held interest given without a qualified appraisal, or reported without adequate disclosure, leaves the IRS's time to challenge the value open indefinitely. The appraisal and the disclosure are planned from the first meeting.
A trust that cannot change
A SLAT may run for decades. A trust protector and Arizona's decanting statute keep it serviceable when the family or the law changes.
A North Scottsdale couple, with and without a SLAT
A married couple in North Scottsdale have a $40 million estate, all of it community property: an investment portfolio, real estate and an interest in a family company. They live well inside their means and want to keep it that way.
Without planning, at 6 per cent growth, the estate is about $128 million in twenty years. The combined exemption, indexed at 2.5 per cent a year, is about $49 million by then, so roughly $79 million is taxed at 40 per cent.
Instead, the couple partitions $30 million into two equal shares of separate property, and in 2026 one spouse gives a $15 million share to a SLAT for the other spouse and their children. The couple keeps $25 million, and the second spouse's exemption is untouched. Twenty years later the trust holds about $48 million, none of it in either estate, and the estate tax falls by about $13 million. The income tax the donor pays on the trust's earnings, left out of the ledger, widens the gap further.
Two costs come with it, both about basis. Assets in the trust get no new basis at either death. And the $15 million share the couple keeps as separate property gets a new basis only if its owner dies first, where community property would get one on both halves at the first death. The swap power manages the first cost, and the size of the partition manages the second. A second, non-reciprocal SLAT would later use the other spouse's exemption the same way. Our full analysis of SLATs, estate tax and basis planning goes further.
| At the second death, year twenty | No SLAT | One SLAT, 2026 |
|---|---|---|
| Estate today | $40,000,000 | $40,000,000 |
| Given to the SLAT in 2026 | $0 | $15,000,000 |
| Couple's estate, 6 per cent growth | $128,290,000 | $80,180,000 |
| SLAT, outside both estates | $0 | $48,110,000 |
| Exemption left, 2.5 per cent indexing | $49,160,000 | $34,160,000 |
| Taxable estate | $79,130,000 | $46,020,000 |
| Federal estate tax at 40 per cent | $31,650,000 | $18,410,000 |
| Reaches the family | $96,640,000 | $109,880,000 |
Federal estate tax kept by the family in this example, from one trust funded with one spouse's exemption. A second, non-reciprocal SLAT would put the other exemption to work.
Arizona law and your SLAT
The tax rules are federal. The trust, and the property that funds it, are governed by Arizona law, and four features of it shape how we draft a SLAT.
No state estate or inheritance tax
Arizona adds nothing to the federal 40 per cent, so the SLAT's work is entirely federal. Trust income is taxed at Arizona's flat 2.5 per cent, and a grantor SLAT reports it on your return.
Community property
Most property acquired during marriage belongs to both spouses equally. That is why a SLAT starts with a partition, and why the partition is sized with care: community property receives a new basis on both halves at the first death, while the survivor's separate property receives none.
A.R.S. § 25-211; IRC § 1014(b)(6)
A trust that can last 500 years
Arizona's statute lets a trust interest remain unvested for up to 500 years, so a SLAT with GST exemption allocated can continue for grandchildren and beyond as a dynasty trust after both spouses die. A 2018 Attorney General opinion called that period likely unconstitutional, and no court has ruled, so where long duration matters we draft flexible administrative powers and a way to move the trust's situs.
A.R.S. § 14-2901; Ariz. Att'y Gen. Op. I18-006
Decanting and settlement agreements
A trustee with discretion can move an older SLAT into a new trust with better terms without going to court, and interested persons can settle many administrative questions by agreement.
A.R.S. §§ 14-10819, 14-10111
What a SLAT costs, published
We publish our fees. A SLAT is priced on the firm's Advanced Planning and Lifetime Wealth Transfer schedule, which you can read before you call.
Each figure is a minimum, fixed in a written engagement letter before work begins. It includes design, drafting, execution, the first $7.5 million funded, and a reporting memorandum for your CPA's gift tax return; each additional $1 million, or part of one, adds the stated figure. The published worked example: a SLAT for one spouse, funded at $20 million, is $54,500 and up.
A shorter runway than the standard 90 days takes a published timing loading, and so does a gift accepted after October 15 for December 31. Closely held interests and pre-IPO stock take an asset loading, and the appraisal passes through at cost. Most SLATs sit beside a revocable trust plan, priced on the core schedule and explained in our 2026 Arizona estate planning cost guide.
| Service | 2026 minimum | Each added $1M |
|---|---|---|
| New SLAT | ||
| SLAT, one spouse | $35,000+ | $1,500 |
| SLATs, both spouses (non-reciprocal pair) | $60,000+ | $2,000 |
| SLANT (non-grantor SLAT) | $40,000+ | $1,500 |
| Alongside the SLAT | ||
| Annual-exclusion gifting program, design | $15,000 | |
| Crummey administration, up to four powerholders | $1,500 / yr | |
| Form 706, portability only | $5,000+ | $500 |
| A SLAT you already have | ||
| Decanting into a new trust | $10,000+ | $1,000 |
| Nonjudicial settlement or modification | $5,000+ | $500 |
Minimums from the published 2026 schedule, before timing and asset loadings. Trust lines with a per-million figure include the first $7.5 million funded; the Form 706 line is computed on the gross estate above $7.5 million. Crummey administration applies only where the trust holds withdrawal powers for annual gifts. Decanting is priced as scoped on the schedule. Where this table and the schedule differ, the schedule controls.
Ten questions about spousal lifetime access trusts
What is a spousal lifetime access trust (SLAT)?
A SLAT is an irrevocable trust one spouse creates and funds for the other spouse, and usually for their descendants. The gift uses the donor's lifetime exemption and, when the trust is funded correctly, removes the assets and their future growth from both spouses' estates, while the trustee can still make distributions to the beneficiary spouse, so the household keeps indirect access.
How much can we put in a SLAT in 2026?
Each spouse can give up to the federal exemption, $15,000,000 in 2026, without paying gift tax, less any exemption already used. For most families the right figure is smaller: what the couple can live without, with the spouse's access as a safety valve. We set it with your wealth advisor's cash flow model before anything is signed.
Can we each create a SLAT for the other?
Yes, if the two trusts are materially different. Under the reciprocal trust doctrine from United States v. Estate of Grace, substantially identical trusts can be uncrossed and pulled back into both estates. We vary timing, assets, trustees, beneficiaries, powers of appointment and distribution standards, and record why.
Why does community property matter for a SLAT in Arizona?
Arizona is a community property state. If community assets fund the trust, the beneficiary spouse is treated as having given half, which can put that half back in the spouse's estate. We partition assets into separate property first, and size the partition knowing that community property receives a new basis on both halves at the first death, while the survivor's separate property receives none.
What happens to a SLAT if we divorce?
The trust is irrevocable, so a divorce does not end it, and for divorce instruments signed after 2018 the donor can remain taxed on the trust's income even though a former spouse benefits. We draft a floating spouse clause, so the beneficiary is the person the donor is married to at the time, and coordinate it with any marital agreement.
What if the beneficiary spouse dies first?
The household's indirect access ends, although the trust continues for the children. We plan for it with life insurance on the beneficiary spouse and a funding amount the donor can live without, and, where the family wants it, a floating spouse clause that would include a later spouse.
Can I be a beneficiary of my own SLAT?
No. If the donor can benefit, the trust is pulled back into the donor's estate, and Arizona has no statute that protects a self-settled trust from the donor's creditors. The donor's access is indirect, through distributions the trustee makes to the spouse.
Do assets in a SLAT get a step-up in basis?
Not at the donor's death. Revenue Ruling 2023-2 confirms that assets in a grantor trust that are not included in the grantor's estate keep their existing basis. A substitution power lets the donor swap cash or high-basis assets into the trust for low-basis assets before death, so those assets receive the step-up in the estate.
How much does a SLAT cost in Arizona at Boland Law Group?
On the firm's published 2026 schedule, a SLAT for one spouse begins at $35,000, a non-grantor SLAT at $40,000, and a non-reciprocal pair for both spouses at $60,000, each including the first $7.5 million funded, plus $1,500, $1,500 and $2,000 respectively for each additional $1 million. The fee is fixed in writing before work begins.
Do you work with SLAT clients outside Scottsdale?
Yes. Clients come to our Scottsdale Airpark office from Paradise Valley, North Scottsdale, Carefree and across the Valley. We also meet by secure video statewide and by in-home appointment in Sedona and the Prescott area. SLATs are governed by federal tax law and Arizona trust and community property law, so the planning is the same across the state.
Bring the balance sheet to the first meeting.
We limit our client volume deliberately, so the first conversation is unhurried. Bring a current statement of what you own and how it is titled, and your existing estate documents. We will tell you whether a SLAT belongs in your plan, one or two, how much to give, and what it costs, before you decide anything.
15100 N. 78th Way, Suite 203
Scottsdale, Arizona 85260
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Monday to Thursday, 9am to 5pm
Saturdays by appointment
Sedona and the Prescott area
Secure video statewide
General information about federal and Arizona law as of September 2026, not legal or tax advice for any particular person, and no attorney-client relationship is formed until a written engagement letter is signed. Exemption and exclusion figures are the 2026 amounts under Rev. Proc. 2025-32. Fee figures are minimums from the firm's published 2026 schedule, before loadings. Passionately Preserving Wealth is a trademark of Boland Law Group, PLLC.