Death of Formula-Based Estate Planning

Throughout a large majority of my 35-year career as a trusts and estates lawyer, formula-based estate planning for spouses was common. Spouses’ wills or revocable trust instruments would frequently provide that, at the death of the first of them to die, the smallest amount (or fractional share) that, if allowed as a marital deduction, would cause the predeceased spouse’s estate to incur no estate tax was to be distributed to the surviving spouse or to a trust qualifying for the marital deduction. The residue of the estate (or the remaining trust property) would pass in a non-marital deduction disposition (usually to a family trust for the concurrent benefit of the surviving spouse and descendants). Alternatively, it was appropriate in some estate-planning situations to provide that, at the death of the first spouse to die, the largest amount (or fractional share) that could pass in a non-marital deduction disposition without causing the predeceased spouse’s estate to incur estate tax was to be distributed to a family trust, and the residue (or remaining trust property) was to be distributed to the surviving spouse or to a trust qualifying for the marital deduction.

read the rest of the article here:  Death of Formula-Based Estate Planning | Estate Planning content from WealthManagement.com.

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