» Do nothing – die intestate – This is a totally unacceptable procedure for any person. The state laws of descent and distribution prevail, with their generally unsatisfactory results. No will is made of record for future generations. Laws can change with unintended results from state to state.
NOTE: Colorado law changed July 1, 1995.
» Joint Tenancy or Payable on Death (“POD”) – This is slightly better than doing nothing, but presents severe problems in the event of simultaneous death or unexpected action by the surviving joint tenant (remarriage). Planning is difficult, except in the most simple of factual scenarios.
» The “simple will” – This approach has the advantage of planned disposition of assets with nomination of a personal representative and intentional designation of beneficiaries. However, it has no ability to provide for minor or incapacitated children and other beneficiaries. Appropriate in some cases, but not all.
» Will and testamentary trust – “Testamentary” is a trust set out in a person’s Will, which only comes into play at the person’s death. This offers far broader estate planning opportunities for minors and disabled beneficiaries, and can assist beneficiaries who are in need. It can also protect certain assets (usually life insurance) of the surviving spouse or beneficiary.
» Will and testamentary trust with the addition of a “Credit Shelter” trust or trusts for surviving spouse and children – This alternative can protect the surviving spouse, and children of a deceased spouse, from careless mis-titling accounts by a surviving spouse (i.e., in a remarriage situation). This alternative also provides maximum amount of tax savings to a surviving spouse and children, contains maximum use and flexibility of the federal estate tax marital deduction and avoids the necessity of a conservatorship for minor children while allowing maximum tax savings in the event of the death of both parents while children are minors.
» Revocable Living Trust – When necessary, and in appropriate situations, this devise provides the ultimate in premortem and postmortem flexibility and tax savings. Properly prepared, it is as close to “ideal” as any alternative can be. It assures all the advantages of a will and testamentary trust, avoids substantive probate, assures privacy and guarantees continuity of management of assets. It is not for everyone, however.
» Multi-Generational Trusts – This devise, when blended into either a “testamentary trust” or a “revocable living trust”, can provide protection from creditors and estate taxes for generations beyond that of the client’s immediate family. Properly implemented, it makes the beneficiaries’ trusts “bullet proof”!! The trust becomes immune to most creditors and estate taxes after the decedent’s death. The beneficiaries’ trust(s) can be designed to survive in perpetuity. Every person can shield up to $5,000,000 from future estate tax and can shield the balance from creditors. Everyone with children should seriously consider the benefits of this planning alternative.