Does your estate plan include a formula funding clause? - Crawford Ellenbogen

It’s not unusual for older estate plans to include a “formula funding clause,” which splits assets between a credit shelter trust and the surviving spouse (either outright or in a marital trust). A formula clause works well when an estate is substantially larger than the exemption amount. However, now that the estate tax exemption is set at an inflation-adjusted $10 million ($11.4 million for 2019), that may no longer be the case for many families. Thus, a formula funding clause can lead to undesirable results, including inadvertent disinheritance of one’s spouse.