Most people do not have a will. Most people who do have one do not have beneficiary designations set correctly. Here is what a will does, when a trust makes sense, what a healthcare directive is, and the single most common estate planning mistake.
READING TIME: 12 MIN
This is educational, not legal advice. Estate law varies significantly by state. Complex estates need a licensed estate attorney. The content below is a map of the territory, not a set of legal instructions. Not financial or legal advice.
Beneficiary designations override your will. A 401(k) or IRA with an ex-spouse still listed goes to the ex-spouse regardless of what your will says. Update them after every major life event. This is the single most common and costly estate planning mistake, and it is free to fix.
A will tells courts: who gets your assets, who becomes guardian of your minor children, and who serves as executor of your estate.
A will does NOT: transfer assets with beneficiary designations (IRAs, 401(k)s, life insurance), transfer jointly owned assets with right of survivorship (those pass to the surviving owner automatically), or avoid probate (a will goes through court).
These accounts pass outside your will entirely: 401(k) and employer retirement plans, IRAs (Traditional and Roth), life insurance policies, annuities, bank accounts with POD (payable on death) designation, brokerage accounts with TOD (transfer on death) designation.
Whatever name is listed as beneficiary on these accounts receives the money, regardless of what your will says 🔍 verify×DON'T TRUST, VERIFYClaim: Beneficiary designations on retirement accounts and life insurance override will provisions.Verify at: DOL on retirement beneficiaries ↗ERISA-governed plans have especially strict beneficiary rules. Egelhoff v. Egelhoff (2001) confirms at the Supreme Court level..
The ex-spouse problem: many people list a spouse as beneficiary when married, divorce, do not update. Spouse is still listed. Spouse gets the money. This has produced famous Supreme Court cases.
Check your beneficiaries right now: every retirement account, every life insurance policy, every bank account with a POD. Set up primary AND contingent beneficiaries on everything. This is a 30-minute task that can matter more than a will.
A revocable living trust avoids probate (assets transfer without court), keeps the estate private (wills become public record, trusts do not), costs more to set up ($1,000 to $3,000+ attorney fees), and must be properly funded (assets retitled into the trust's name).
Two documents most people do not have and everyone should:
These are separate from your financial will. Both should exist. Many states offer standard forms free from state medical or bar associations. An attorney review is worthwhile, but these documents do not strictly require one to execute.
For Bitcoin holders, your heirs need three things: that the Bitcoin exists, where it is (which wallet), and how to access it (seed phrase). Do not put seed phrases in a will. Wills become public record through probate. A seed phrase in a will becomes a publicly accessible theft instruction.
Consider a "digital assets memorandum," a private document (not part of the public will) that your executor knows exists and can access. Can include password manager, email accounts, social media, domain names, exchange accounts, and secure pointers to hardware wallets or seed phrase storage.
For the full Bitcoin-specific treatment, see Bitcoin Inheritance.
Simple situations: Trust & Will ↗, LegalZoom, Fabric. Templates. Limitations for complex situations.
Simple will + healthcare directive: $500-1,500. Full estate plan with trust: $2,000-5,000+. State bar referral. ACTEC specialists ↗ for complex estates.
Last updated 2026-04-22. Not legal advice. Estate law varies by state. Complex estates need an estate attorney.