Go pull your revocable trust out of the drawer.
Find the paragraph that says something like “the minimum pecuniary amount necessary to reduce to zero the federal estate tax owed as a result of my death.” Or “that portion of the residue equal to the maximum amount that can pass free of federal estate tax.” Or the A/B trust language, or the Marital and Family Trust split, or anything that refers to the “applicable exclusion amount” without naming a dollar figure.
That’s a formula clause. And if your document was drafted before January 1, 2026, your plan may not be doing what you think it’s doing.
Here is the problem. Formula clauses solve a real problem. They let a document adjust to whatever the exemption is at the time of death, so you do not have to redraft every time Congress changes the law. They work beautifully when exemptions move in small increments. They break when exemptions move a lot.
Take a second-marriage trust drafted in 2008, when the exemption was $2 million. The standard structure: on the first death, the formula directs the exemption amount into a Family Trust for the kids from a prior marriage, and the balance into a Marital Trust for the surviving spouse. With a $2 million exemption and a $5 million estate, the kids get $2 million and the spouse gets $3 million. Fine.
Same document, same estate, same formula — applied on January 2, 2026. The federal exemption is now $15 million, permanent, indexed for inflation under the One Big Beautiful Bill Act signed in July 2025. The formula says the kids’ trust gets funded with “the maximum amount that can pass free of federal estate tax.” That’s now the entire $5 million estate. The surviving spouse’s Marital Trust gets zero.
The spouse has been disinherited by a clause the testator wrote to protect her.
That is not a hypothetical. It is happening in Florida right now, on documents drafted between 2001 and 2018 when exemptions ran from $1 million to $11.18 million. The person who drafted the document is often retired or dead. The testator is dead. The surviving spouse finds out at the funeral that the “plan for both of us” did not plan for her.
The other version of the problem runs the opposite direction. A Credit Shelter Trust funded to the exemption amount, with the balance to the surviving spouse — when the exemption is $15 million and the estate is $6 million, the entire estate goes into the Credit Shelter Trust. Nothing qualifies for the marital deduction because there is no marital share. That may be fine. It may also defeat basis step-up planning at the surviving spouse’s death, cost the family hundreds of thousands in capital gains tax, and miss a portability election nobody thought to make.
Here is what I need people to understand. The formula clause is not the bug. The bug is that nobody goes back and re-reads the document when the law changes underneath it.
OBBBA was signed July 4, 2025. The permanent $15 million exemption took effect January 1, 2026. For the first time in almost two decades, there is no scheduled sunset and no pending cliff. That sounds like good news, and for most people it is. But it also means every estate plan written to hedge against a 2026 reversion — which was everyone’s assumption for the last eight years — is now operating in a world that did not happen.
If your revocable trust was drafted before 2026 and you have not had it reviewed since, you should have it reviewed. Not because the exemption is expiring. Because it did not expire, and your document may be making decisions based on an event that never occurred.
The review itself is not complicated. An estate planning attorney who reads these documents for a living can tell you in forty-five minutes whether your formula still works, whether it blows up, or whether it is fine but should be modernized for basis step-up and portability planning.
What it will not do is fix itself.