A spousal lifetime access trust works because you are married. One spouse gives assets away permanently to reduce future estate tax, and the family keeps indirect access to those assets through distributions to the other spouse. Divorce removes the assumption the whole structure rests on, and the trust itself is generally irrevocable, meaning it cannot simply be unwound because circumstances changed. Palm Beach County families funded a great many of these in recent years, and a high net worth divorce financial planner in West Palm Beach now sees them regularly in cases where neither spouse fully understood what the document said about this scenario.
What is a SLAT, and why do so many families here have one?
A spousal lifetime access trust, or SLAT, is an irrevocable trust one spouse creates and funds for the benefit of the other spouse, often alongside children and grandchildren. The gift uses part of the donor spouse’s lifetime gift and estate tax exemption, removing the assets and their future growth from both estates, while the beneficiary spouse can still receive distributions that support the household.
Funding accelerated in recent years because the federal exemption was scheduled to drop sharply at the end of 2025, and many families acted to use the higher amount before it disappeared. Legislation enacted in 2025 changed that trajectory, setting a higher permanent exemption going forward. The trusts created in anticipation of the earlier deadline remain in place regardless, since irrevocable means irrevocable. Current exemption figures should be confirmed with a tax professional, as they are indexed and subject to change.
Is the trust part of the marital estate in a Florida divorce?
Usually not directly, because neither spouse owns the assets anymore. A completed gift to an irrevocable trust generally removes the property from the donor’s estate, and a discretionary beneficiary interest is not the same as ownership.
That does not make the trust irrelevant to the case. Florida courts applying equitable distribution consider a range of factors, and a beneficiary spouse’s access to trust distributions can inform the overall picture even when the trust corpus is not divided. Questions also arise about how the trust was funded. If marital assets were transferred without the other spouse’s knowledge or shortly before a filing, that raises issues worth surfacing with counsel early rather than at mediation.
Does an ex-spouse stay a beneficiary after the divorce?
It depends entirely on how the trust defines the beneficiary, which is the single most important sentence in the document for divorcing couples.
Some SLATs name the spouse by name. In that case the former spouse may continue as a beneficiary after the divorce, which donors frequently find unacceptable once they read it. Other trusts use what practitioners call a floating spouse provision, defining the beneficiary as whoever the donor is married to at a given time. That language removes the ex-spouse automatically and would include a future spouse.
Neither version is obviously better. The floating clause protects the donor and strips the other spouse of an income source the household may have depended on. The named version preserves that access and ties two people together financially for decades. Reading the actual language before negotiating is the starting point.
Florida statutes that automatically void spousal provisions upon dissolution generally apply to revocable instruments and beneficiary designations, not to an irrevocable trust of this kind, which is a distinction people assume incorrectly.
Who pays the income tax on the trust after the divorce?
Often the donor spouse, and this catches people off guard. SLATs are typically structured as grantor trusts, meaning the person who created the trust pays income tax on its earnings. That feature is intentional during the marriage, since paying the tax further reduces the taxable estate without counting as an additional gift.
After a divorce, if the former spouse remains a beneficiary, grantor trust treatment may continue. The Internal Revenue Code provision that once shifted this tax burden following divorce was repealed as part of the 2017 tax law, which removed a release valve that older planning assumed. The result can be a donor paying income tax annually on a trust that benefits a former spouse. Whether that applies in a specific case depends on the trust terms and should be evaluated by a tax advisor and trust counsel.
What if both spouses created trusts for each other?
That arrangement draws attention to the reciprocal trust doctrine, under which substantially similar trusts created by two spouses for one another can be treated as if each created the trust for themselves, potentially pulling assets back into the taxable estates.
Practitioners who set up paired SLATs typically build in differences to avoid that result. Divorce puts both documents under a microscope at once, and any weaknesses in how they were differentiated become relevant to both the tax picture and the negotiation.
Are there ways to adjust the structure?
Sometimes, depending on the document and state law. Possibilities that trust counsel may evaluate include powers held by a trust protector, decanting into a new trust with different terms, nonjudicial settlement agreements, judicial modification or reformation, trustee discretion over distributions, and a retained power to substitute assets of equivalent value.
None of these is available in every case, and each carries tax consequences that need analysis before anyone acts. Attempting to modify an irrevocable trust as part of a divorce negotiation without coordinated trust and tax counsel is how a solvable problem becomes an expensive one.
Where a high net worth divorce financial planner in West Palm Beach fits
The financial professional’s role is to quantify what the trust means for each spouse’s future cash flow and to keep the estate plan connected to the divorce settlement rather than running on a separate track. That includes modeling household needs if trust distributions end, comparing settlement proposals on an after-tax basis, and making sure the estate attorney, the tax advisor, and the collaborative attorneys are working from the same set of numbers.
Modeling illustrates possible outcomes under stated assumptions. It does not predict results, and tax law, investment performance, and trustee decisions all vary. Nothing here is legal or tax advice, and Florida counsel should review any specific trust.
Cases involving these structures are also a strong argument for a collaborative process, where a single financial neutral can coordinate with existing advisors and the details stay out of a public court file.
A SLAT drafted for a marriage rarely anticipates its end, and the answer lives in the document rather than in general rules. Reviewing it with a high net worth divorce financial planner in West Palm Beach alongside your trust and tax advisors early in the process gives both spouses a realistic view of what the structure does from here.
