If you ask people what they want their estate to look like when they die, you get a few flavors of the same answer. "I want to leave something to my kids." "I don't want them fighting." "I don't want the government to get more than it already does." "I don't want it to be a mess." Reasonable, all of it. But here's the thing — almost none of those outcomes happen by accident. A clean estate is the byproduct of years of decisions, most of which have nothing to do with the will you signed at the lawyer's office and everything to do with how your assets are titled, who you named as beneficiary in 2009 and forgot about, and whether anyone ever sat down and thought about your IRA before you turned 73.
Estate planning, for high-net-worth folks especially, is less about one big document and more about a bunch of small decisions made on purpose. Let's run through some of them.
Your will won’t fix probate. It just gives the probate judge instructions.
This one trips people up constantly. They sign a will, file it away, and assume they've solved the probate problem. They have not. A will is a set of instructions for the probate court — it tells the court who gets what. It does not bypass the court. Probate is the legal process by which a deceased person's assets get retitled into someone else's name, and a will is the roadmap, not the detour around it.
What actually keeps assets out of probate is one of two things: a beneficiary designation, or how the asset is titled. IRAs, 401(k)s, life insurance, annuities — these all pass by beneficiary designation, completely outside of probate, regardless of what your will says – of course, this assumes you didn’t fail to name a beneficiary. (Yes, even if your will says otherwise. The beneficiary form wins. Always. Which is why you should look at yours. Today. I'll wait.) Brokerage and bank accounts can be set up with TOD (transfer on death) or POD (payable on death) designations and accomplish the same thing. Real estate can be held jointly with right of survivorship or, in many states, transferred via a transfer-on-death deed (attorneys can also help with this if you don’t want to do it on your own). Done correctly, you can run an entire estate through without setting foot in probate court — without a trust, without anything fancy.
So, if you're worried about probate (and you should be — it's slow, public, and depending on the state, expensive), the fix usually isn't "go get a trust." The fix is "spend an hour with your advisor or an attorney going through every account you own and making sure the beneficiaries and titling reflect what you actually want." It's not glamorous, but it will save you money in the long run.
Trusts solve a different problem than most people think they solve.
If your concern is "I want to avoid the federal estate tax," congratulations, you almost certainly don't have to worry about it. The federal estate tax exemption is currently around $15 million per person — $30 million for a married couple. Unless you're in that neighborhood, the federal estate tax is a non-issue, and a trust isn't going to save you taxes you weren't going to owe anyway. A handful of states have lower thresholds (our home state of Nebraska is unfortunately prominent on this list), so check your state, but for most people, "I need a trust to avoid estate taxes" is a sentence built on a misunderstanding.
What trusts actually do well is control. If you want assets to skip a generation, a trust does that. If you want to provide for a special needs beneficiary without disqualifying them from benefits, a trust does that. If you want to keep assets out of a future son- or daughter-in-law's hands in the event of a divorce, a trust does that. If you have a kid who is, let's say, financially aspirational without the corresponding execution, a trust can dole out money over time instead of handing them a check. If you want privacy — wills become public during probate, trusts don't — a trust does that. And if you live in a state with a brutal probate process, a revocable living trust can sidestep the whole circus.
The takeaway: trusts are about control and protection, not tax avoidance for the merely affluent (trusts can mitigate taxes in some instances, they just aren’t always necessary). If your net worth is $4 million and your only goal is "leave it to the kids cleanly," you probably don't need a trust. You need clean beneficiary designations, joint titling where appropriate, and a will to handle whatever's left over. If your goal is "leave it to the kids but only after they turn 35 and only if they don't blow it on something stupid," now we're in trust territory.
The IRA is where the real tax planning lives.
Here's where things get interesting, and where I find people are most under-served. If you have a large traditional IRA — let's say $2 million or more — and you intend to leave it to your kids, you have a tax problem you may not know about. The SECURE Act killed the old "stretch IRA" for non-spouse beneficiaries. With limited exceptions, when your kids inherit your IRA, they have to drain it within 10 years. That's it. Ten years.
Why does that matter? Because the dollars coming out of that IRA land on top of your kid's existing income. If your kid is a 45-year-old physician earning $400,000 and they inherit a $2 million IRA, they're now distributing $200,000+ a year on top of their already-high income, in their peak earning years, taxed at the top marginal rates. It would be fair to call them a brat for complaining about inheriting $2 million, but the point remains – why pay 35% in taxes on money you could’ve paid 22% on? The IRS does great. Your kid does fine. But a meaningful chunk of what you spent forty years saving evaporates into federal and state income tax that, with planning, you might have paid at much lower rates yourself.
This is the case for Roth conversions, and it's where the math gets nuanced. The question isn't really "should I do Roth conversions?" The question is "whose tax bracket is going to pay the tax on this money — mine, or my heirs', and which is lower?" If you're a retiree in the 12% or 22% bracket and your kids will inherit while in the 32% or 37% bracket, paying your tax now to convert is, mathematically, a transfer of value from the IRS to your family. It's not particularly close.
A few things sharpen or dull that math:
The number of kids matters more than people realize. If you have one kid and a $3 million IRA, that whole distribution lands on one tax return over ten years — concentrated, brutal. If you have five kids and a $1 million IRA, it's spread across five tax returns, much more digestible, and the case for aggressive Roth conversions weakens. Still potentially worthwhile, especially if some of those kids are in high brackets, but the urgency drops.
Their existing brackets matter. A retired-already kid in the 12% bracket inheriting your IRA may pay less tax on it than you would converting. Don't convert in that case. A high-earning kid in the 35% bracket changes the calculus immediately.
Your own bracket matters. The window between retirement and RMD age (currently 73 or 75 depending on birth year) is often the lowest-tax decade of someone's life. Earned income has stopped, Social Security may not have started, and the standard deduction is doing real work. Filling up the 12%, 22%, and even 24% brackets with conversions during those years is one of the highest-leverage planning moves available. Miss that window, RMDs kick in, your bracket goes up, and now you're converting at higher rates or not at all (at the very least, you have less room to convert).
State of residence matters. Converting while you live in a no-income-tax state and then moving to one with high income tax (or vice versa) changes the answer. Same goes for your heirs.
I'm not saying everyone should max out conversions. I'm saying the people who should are very often the ones not doing it, and the people who think they need to often shouldn't. It's a math problem, and the inputs are specific to you.
Asset location: a free lunch nobody orders.
Not all assets are taxed the same way, and not all accounts are taxed the same way, and where you put each thing actually matters. Roth accounts shield growth forever. Traditional IRAs defer growth but tax it as ordinary income on the way out. Taxable brokerage accounts get the benefit of long-term capital gains rates and a step-up in basis at death. (The step-up alone is reason enough to think about this carefully — appreciated stock in a brokerage account, held until death, completely escapes income tax on the embedded gain. Same stock inside an IRA gets taxed as ordinary income.)
So, broadly: high-growth stuff (small caps, growth equities, anything you expect to compound aggressively) makes sense in Roth accounts where the growth is tax-free forever. Bonds and other tax-inefficient income generators belong in retirement accounts where the distributions inside the account don’t impact your tax bill (only distributions from the accounts). Tax-efficient broad-market index funds and individual stocks you intend to hold long-term belong in taxable brokerage accounts, where they get capital gains rates and the step-up.
This isn't groundbreaking, but I'd estimate the majority of households I look at have it backwards or scrambled, paying full freight on income that would have been zero and converting capital gains into ordinary income for no good reason. Cleaning this up saves real money when done thoughtfully.
Income planning is estate planning in disguise.
How you draw down assets in retirement directly determines what's left at the end and in what form. Pulling exclusively from taxable brokerage accounts in your 60s might feel "tax-efficient" in the moment, but if it leaves you with an enormous traditional IRA at 73 facing massive RMDs, you've just deferred the bill — possibly into your kids' tax returns. Conversely, draining the IRA first might give up the step-up benefit on appreciated brokerage assets that could have passed to heirs tax-free.
The right answer is almost always a blend, calibrated year by year, designed to manage your bracket today, your future RMDs, and the tax character of what your estate will eventually pass on. It is, dare I say, a financial plan.
The boring stuff that wrecks estates.
A few things I keep seeing:
Beneficiary forms not updated after a divorce. Yes, your ex-wife is still on your 401(k). Yes, that means she gets it. The form wins, remember? Surprise!
No contingent beneficiaries. You named your spouse as primary, didn't name a contingent, and you both die in the same accident. Now the IRA goes through probate, defeating one of the main reasons it had a beneficiary form to begin with, and your kids inherit on a five-year payout schedule instead of ten. (For most non-spouse beneficiaries, naming them as designated beneficiaries gets the 10-year rule. Skipping the designation and letting the estate inherit can be much worse.)
Naming the trust as IRA beneficiary without thinking it through. There are good reasons to do this and bad ones, and the trust has to be drafted as a "see-through" trust to preserve the 10-year rule. A poorly-drafted trust as beneficiary can accelerate the entire IRA into income in five years, taxed inside the trust at compressed rates that hit the top bracket at around $15,000 of income. This is a genuine catastrophe and it's done by accident regularly.
Joint titling everything with a kid "for convenience." Your kid is now a co-owner. Their creditors can come after the account. Their divorce can entangle it. They can drain it. People do this with checking accounts to help an aging parent and don't realize what they've actually done. There are better tools — POA, TOD designation, agent on the account — that accomplish the goal without the exposure.
Old wills naming a guardian for a now-30-year-old. Or naming an executor who's been dead for six years. Or referring to a house you sold in 2014. Estates with old, ignored documents create more problems than estates with no documents.
The point.
A clean estate isn't an accident, and it usually isn't expensive to create. It's a half-day at the conference table with someone who knows what they're looking at, going through every account, every beneficiary, every title, every document, and making sure the whole thing tells one coherent story. The big stuff — Roth conversions, asset location, trust planning — only really pays off when the boring stuff underneath is correct. Get the foundation right first. Then you can argue about the math.
Your heirs will never know how much work went into making it look easy. That's kind of the point.