For Founders / The instruments
What a SLANT is, and when it is the wrong tool.
A spousal lifetime access non-grantor trust is an irrevocable trust drafted with the intention that it be treated as a separate taxpayer rather than as part of the grantor's own return, while a spouse remains within the class of people who may benefit from it.
The problem it is built to solve
The main objection to irrevocable planning is simple and entirely reasonable: the money is gone. A founder asked to transfer a meaningful share of their equity into a trust they cannot revoke, cannot control, and cannot benefit from is being asked to accept a real loss of access in exchange for a tax position that may or may not ever be tested.
A spousal trust answers that objection by keeping a spouse within the beneficiary class. If the family's circumstances change, distributions can reach the spouse, and through the spouse, the household.
The difficulty is that the ordinary version of this instrument, a spousal lifetime access trust, is a grantor trust. Benefit to a spouse is attributed back to the grantor, so the trust's income is taxed on the grantor's own return and the trust is not a separate taxpayer. For a founder whose reason for building the trust was that a separate taxpayer has a separate Section 1202 limitation, that defeats the purpose entirely.
A SLANT is the attempt to have both: spousal access, and separate-taxpayer treatment.
How the tension is resolved
The design turns on a single mechanism. Every distribution to the beneficiary spouse is gated behind the consent of a genuinely adverse party, meaning someone with a substantial beneficial interest in the trust that would be diminished if the distribution were made.
That person cannot be the beneficiary spouse, and a professional trustee does not qualify simply by being independent. An adverse party must have something real to lose. In practice this usually means an adult child who is a remainder beneficiary, and whose share is reduced by every dollar that goes to the parent.
The consequence is worth stating plainly, because it is the part families underestimate. The instrument gives one of your children a veto over your spouse's access to the money. In a family with ample outside assets and easy relationships, that is a formality. In a family with tight liquidity or strained relationships, it is a live source of friction, and it is written into an irrevocable document.
There is a second, subtler risk. If the adverse party approves every request without thought, the argument is available that the consent was illusory and the gate was never real. The discipline has to be genuine, which means the person holding it has to understand what they are holding.
What drafting it well requires
Isolating the spouse's interests
The trust must avoid granting the beneficiary spouse any right or power that would be imputed back to the grantor. The attribution rules reach both powers held by the spouse and the spouse's own beneficial interests, so the drafting has to be deliberate about each.
Choosing the adverse party
The interest has to be substantial enough to be genuinely adverse, which is a question of fact rather than a label. A contingent or nominal interest may not carry the weight the structure needs.
Planning for that person's absence
If the adverse party dies, resigns, or ceases to hold a substantial interest, the trust can lose the feature that made it non-grantor. A well-drafted SLANT includes a mechanism for replacing them.
Situs and trustee selection
Where the trust is administered affects its state income tax exposure and the law that governs it. Maryland, DC, and Washington each treat these questions differently, and a relocation can change the answer.
Divorce contingencies
A spousal trust carries divorce considerations that a trust for children does not. What happens to the spouse's beneficial interest on separation should be decided at drafting rather than discovered later.
Administration afterward
Separate records, separate tax filings, real trustee decisions, and documented consents. A trust administered casually is the one that is hardest to defend if it is ever examined.
When we say no to a SLANT
It is a demanding instrument, and it is not right for every couple. These are the situations where we would steer a client elsewhere.
- There is no candidate for adverse party whose interest is substantial enough to be genuine.
- The family dynamic makes a child's veto over a parent's access untenable.
- The household would need access on terms the gate cannot realistically accommodate.
- The foundation plan is not in place, in which case that comes first.
- The expected benefit does not justify the irrevocability, the cost, or the ongoing administration.
Some founders are better served by a simpler plan, and saying so is part of the work.
Where this fits
A SLANT is one instrument among several, and it sits on top of an ordinary, well-built estate plan rather than in place of one. Whether it fits depends on the entity, the stock, the holding period, your state of residence, your marital situation, and what you want the money to do.
Important notice. This page is general information for educational purposes, not legal or tax advice, and it does not create an attorney-client relationship. Whether any structure described here is appropriate, or permitted, depends on facts specific to you, your company, and your state of residence, and tax law is subject to change, including with retroactive or prospective effect. No outcome, tax treatment, or result is promised or guaranteed. Prior results do not guarantee a similar outcome. Please consult us, or qualified counsel of your choosing, about your particular circumstances before acting.