Gifting $5M Into a SLAT Freezes Exemption Use at Today's Value — Even With No Sunset Left
We ran $5,000,000 gifted into a SLAT through the calculator, growing at 7% for 20 years, against a 40% combined estate tax rate: the asset grows to $19,348,422 outside either spouse’s estate — $14,348,422 of that is pure appreciation that never needed exemption or faced estate tax, worth $5,739,369 in avoided tax. For years, SLATs were pitched with real urgency: “fund it before the TCJA exemption sunsets back to roughly half its size.” That urgency is now gone.
What actually changed in 2025-2026
| Old TCJA framing | Current reality (OBBBA) | |
|---|---|---|
| 2025 exemption | $13.99M individual | Superseded |
| 2026 exemption (pre-OBBBA expectation) | ~$7M (sunset back to pre-2018 levels) | $15M individual, permanent |
| Sunset risk | Real, deadline-driven | Eliminated — no sunset, indexed annually |
| “Use it or lose it” urgency | The primary SLAT sales pitch | No longer applies |
The One Big Beautiful Bill Act of 2025 made the $15M exemption ($30M for married couples) permanent, with no expiration and continued inflation indexing. That single change eliminated the deadline that drove most of the SLAT enthusiasm over the past several years.
The benefit that was never about the deadline
The freeze mechanic is separate math entirely: gifting an asset today uses lifetime exemption equal to TODAY’s value. Every dollar it appreciates afterward — inside the trust, outside both spouses’ estates — never needs exemption and never faces estate tax, regardless of whether any exemption “sunset” exists. An estate that expects meaningful growth over decades still benefits from this freeze even with a permanently high, non-expiring exemption, simply because growth compounds and even a generous exemption can eventually be outgrown by a large, appreciating estate.
Where this framework doesn’t apply
- Your estate is comfortably under $15M/$30M and isn’t expected to grow past it. If the estate will never be exposed to estate tax regardless of growth, there’s no tax to shelter — see how state estate tax exposure is actually more common than federal for the more likely real-world exposure many households face instead.
- Both spouses would set up nearly identical trusts for each other. The reciprocal trust doctrine lets courts unwind mirror-image SLATs — they need genuine, documented differences.
- The couple might divorce. A SLAT’s key feature — beneficiary-spouse access — disappears if that spouse is no longer married to the donor.
- You need direct, personal control over the gifted assets. Irrevocable means irrevocable.
What to actually do
- Run the Estate Tax Exposure calculator first to confirm your estate is genuinely exposed to estate tax at the margin, now or on a growth trajectory.
- Choose assets with high expected appreciation to gift — the freeze benefit scales with growth, not size alone.
- Work with an estate attorney to draft genuinely distinct trust terms if both spouses plan to fund SLATs for each other.
- Use an independent trustee for distributions to the beneficiary spouse, to avoid undermining the trust’s exclusion from the estate.
- If a life insurance policy is also part of the plan, see the ILIT tool for a directly comparable trust-cost structure to layer alongside a SLAT.
Open the SLAT Future Appreciation Calculator → and run your own gift size and time horizon.
Quick answers
What is a Spousal Lifetime Access Trust (SLAT)?
An irrevocable trust one spouse funds for the benefit of the other spouse (and often children), using a completed gift against the donor's lifetime gift/estate exemption. The beneficiary spouse can still receive trust income and, with an independent trustee, principal — so the couple retains indirect economic access even though the assets are legally outside both spouses' estates.
Do I still need a SLAT now that the estate tax exemption sunset was cancelled?
The 'use it before it's gone' urgency is gone, since the One Big Beautiful Bill Act of 2025 made the higher exemption permanent. But the freeze benefit — locking in today's value so future appreciation escapes the estate and future exemption usage entirely — is unrelated to any deadline and remains real for any estate expected to grow past its available exemption.
What is the 'reciprocal trust doctrine' risk with a SLAT?
If both spouses set up nearly identical trusts for each other, a court can disregard both trusts as if the spouses never actually gave anything up. SLATs for both spouses need genuine, documented differences in terms, trustees, and timing to survive this doctrine.
What happens to a SLAT if the couple divorces?
The beneficiary spouse's access is tied to being married to the donor spouse — a divorce generally ends that access, even though the trust itself remains irrevocable. This is one of the most significant, often underappreciated risks of the strategy.