Estate plans for married clients typically provide first for the surviving spouse, in a manner that avoids estate tax at the first spouse’s death and minimizes that tax at the second spouse’s death. This is often accomplished by including technical and often lengthy “marital deduction formula clauses” in the will or revocable trust instrument, which provide for division of the client’s property into two or more separate trusts, each with different tax attributes. If an estate plan was prepared more than two or three years ago, before certain recent tax developments, the plan may not accomplish its original purpose, and may indeed create results quite contrary to the client’s intent. The plan might even disinherit the spouse, at least in part. Those recent changes include a reduction in the impact of the federal estate tax, repeal of many of the state death taxes, and the resultant increased relative importance of income tax planning. Since each estate planning document is unique to a particular client, it is difficult to generalize just which documents have become obsolete or deficient, for which clients, and for what reasons. The only sensible approach is for individuals to review their plans with competent counsel.

Bob Brucken (Retired Partner)