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Pecuniary Formula: A Comprehensive Guide to Its Legal Definition
Definition & Meaning
A pecuniary formula is a method used in estate planning to allocate a specific dollar amount from an estate to a marital share, separating it from other distributions. This approach ensures that the marital share receives a guaranteed sum, while allowing the personal representative to choose which assets will fund this share. Additionally, it requires the revaluation of assets to account for any changes in their value after death but before distribution. The two main types of pecuniary formulas are:
Pecuniary Credit Shelter Formula: This formula funds a bypass trust with a specific dollar amount and allocates the remaining estate to the residuary estate equal to the claimed marital deduction.
Pecuniary Marital Deduction Formula: This formula designates a specific dollar amount for the marital bequest while funding the bypass trust with the remainder of the estate.
Table of content
Legal Use & context
Pecuniary formulas are primarily used in family law and estate planning. They help determine how an estate is divided among heirs, particularly in ensuring that a surviving spouse receives a fair share. This method is often included in wills and trusts, making it essential for personal representatives and estate planners to understand how to implement these formulas effectively. Users can manage these processes themselves with the assistance of legal templates provided by US Legal Forms, which are drafted by qualified attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: In a will, a person specifies that their spouse should receive $200,000 from the estate. The personal representative can then choose which assets to liquidate or distribute to meet this obligation.
Example 2: A couple uses the Pecuniary Credit Shelter Formula, where the surviving spouse receives a specific amount, and the remainder goes into a bypass trust for tax benefits. (hypothetical example)
State-by-state differences
State
Variation
California
Allows for simplified procedures in estate division under certain conditions.
New York
Requires specific language in wills to implement pecuniary formulas.
Texas
Has unique community property laws affecting marital shares.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Common misunderstandings
What to do if this term applies to you
If you are planning your estate or managing a loved one's estate, consider using a pecuniary formula to ensure fair distribution. You can explore ready-to-use legal form templates from US Legal Forms to assist you in drafting the necessary documents. If your situation is complex, it may be beneficial to consult a legal professional for tailored advice.
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