Estate Planning

Estate Planning: The Gap Almost Every New Client Has

Dominik Yates · July 28, 2026 · 8 min read

In nearly every introductory meeting we hold, the pattern is the same: financially capable adults — people with income, property, children, and often a blended household — arrive with no will, no trust, and no beneficiary designations on record. This is not a fringe observation. It is the most consistent finding across our client intake process, and the data bears it out at the national level as well. Estate planning is the most universally neglected area of personal finance, and for families with dependents or property, it carries some of the heaviest consequences.

The Numbers Are Worse Than You Think

Most people assume the estate planning gap is a problem for the inattentive or uninformed. The evidence suggests otherwise. According to Caring.com's 2025 Wills and Estate Planning Study, only 24% of U.S. adults have a will — down from 33% in 2022. That means roughly three in four Americans have no legal instructions governing how their assets should be handled after death.

The Trust & Will 2025 Estate Planning Report, drawn from a survey of 10,000 adults, found that 55% of Americans have no estate planning documents whatsoever — no will, no trust, no legal plan of any kind. What makes this finding especially difficult to dismiss is that 83% of respondents in the same study acknowledged that estate planning is important. The gap is not one of awareness. It is one of action.

Among parents with minor children, only 36% of parents with minor children have a will, leaving guardianship decisions up to the courts for the majority of families with young dependents. That is perhaps the most consequential version of this problem: not just a question of who inherits the house, but who raises the children.

What Happens When There Is No Plan

Without a will or trust, state intestacy laws fill the void — and they do so mechanically, without regard for your family's actual dynamics. For a blended household, the consequences can be particularly stark. Without proper planning, an ex-spouse may end up controlling a child's inheritance as guardian of the property, which may not align with the parent's wishes at all. Stepchildren do not automatically inherit unless explicitly named. Even long-term stepparents who raised children from a young age have no standing under default state law.

The probate process, which governs estates without valid planning documents, adds time, legal fees, and public disclosure — the exact outcomes a well-structured plan is designed to avoid. For retirement accounts specifically, when an IRA passes through an estate rather than directly to a named beneficiary, the distribution rules become less favorable, potentially forcing faster withdrawals and a larger tax hit.

And then there is the problem most people do not even think about: beneficiary designations. These are the forms on file at your 401(k) provider, your IRA custodian, your life insurance company. They operate entirely outside your will or trust, overriding whatever your formal estate documents say. An outdated form can redirect hundreds of thousands of dollars away from the people you intended to protect. A missing contingent beneficiary can trigger probate costs that eat into your heirs' inheritance. Outdated beneficiary forms from a prior marriage, a prior employer, or a prior chapter of life do not quietly expire. They sit there, legally binding, until someone updates them.

The Three Layers Most Families Are Missing

When we look at what is actually absent in most introductory situations, it tends to fall into three categories — and addressing all three matters, because each one operates differently under the law.

A will or trust. This is the foundational document specifying how assets should be distributed, who should manage the estate, and — critically for parents — who should serve as guardian for minor children. A revocable living trust goes further, allowing assets to transfer without probate and providing greater flexibility for complex family situations.
Beneficiary designations, reviewed and current. Retirement accounts, life insurance policies, and payable-on-death bank accounts pass directly to whoever is named on the form — regardless of what your will says. These need to be reviewed after every major life event: marriage, divorce, the birth of a child, the death of a prior beneficiary. Many plans automatically designate a spouse or child as a default, but relying on default provisions is not a substitute for an explicit, deliberate choice.
Powers of attorney and healthcare directives. Estate planning is not only about death. A durable power of attorney designates someone to manage your finances if you become incapacitated. A healthcare directive (or living will) specifies your medical wishes. Without these documents, families often face court proceedings to establish guardianship or conservatorship — a process that is slow, expensive, and emotionally costly.

Why High Earners Are Not Exempt

There is a persistent belief that estate planning is something you need only once your net worth reaches a certain threshold. This logic has it backwards. The more complex a financial life — multiple income sources, a business interest, equity compensation, a blended household, real property — the more damage a planning gap can inflict. Complexity without structure does not manage itself. It defaults to state law and institutional rules, which are indifferent to individual circumstances.

For business owners, the estate planning gap can intersect with a succession gap: no buy-sell agreement funded with life insurance, no plan for how an ownership stake transfers, no clarity on whether a business interest flows through a will (and therefore probate) or through a separately structured vehicle. These are not small questions. They can determine whether a business survives the death of a founder or becomes a contested asset in an estate proceeding.

For clients with equity compensation or concentrated stock positions, beneficiary designations and trust structures determine how those assets transfer, what tax treatment applies, and whether a surviving spouse or heir inherits a position or a tax liability. The SECURE Act significantly changed rules for inherited retirement accounts, eliminating the stretch IRA option for most non-spouse beneficiaries, who must now generally withdraw the entire account within ten years of the owner's death. That rule change alone reshaped the calculus for how beneficiaries should be named on retirement accounts — and most plans have not been updated to reflect it.

How We Approach This

At Applied Wealth Management, estate planning is not a standalone conversation we refer out and forget. It is one of the coordinated disciplines inside the Vantage Formula — reviewed alongside tax planning, retirement income strategy, and investment management, because decisions in one area ripple through the others. When a client names their estate as the beneficiary of a retirement account rather than an individual or a properly drafted trust, that is not just an estate planning error. It has tax consequences that show up in the income plan and the investment structure as well.

We work with clients and their estate planning attorneys to ensure that the formal documents, the beneficiary designations, and the broader financial plan are aligned — not operating in isolation from each other. The goal is a plan that reflects your actual intentions, holds up under the law, and does not leave your family navigating court proceedings at an already difficult moment.

Common questions

Does a will avoid probate?

Not on its own. A will directs how assets are distributed, but assets that pass through a will typically still go through the probate process — which involves court oversight, potential delays, and public disclosure. A revocable living trust, by contrast, allows assets to transfer to beneficiaries without going through probate, which is one reason trusts are often used alongside a will rather than instead of one. Accounts with valid beneficiary designations or payable-on-death instructions also pass outside of probate, directly to the named individual.

Do beneficiary designations override a will?

Yes — and this is one of the most consequential misunderstandings in estate planning. Retirement accounts, life insurance policies, and transfer-on-death accounts are governed by whoever is named on the beneficiary designation form, regardless of what a will or trust document says. This means an outdated designation — naming a prior spouse, a deceased parent, or leaving a line blank — can override years of carefully drafted estate documents. Reviewing beneficiary designations after every major life event is not optional; it is foundational.

When does estate planning become urgent for a blended family?

From the moment the family structure changes. Blended families face a specific set of risks that standard state intestacy laws do not resolve well: stepchildren who are not automatically included as heirs, an ex-spouse who may retain control over a child's inherited assets, and competing interests between a surviving spouse and children from a prior relationship. Without proper planning, even well-intentioned parents risk unintentionally disinheriting their children. A tailored plan — one that addresses guardianship, trust structures, and beneficiary alignment — is not a luxury for blended households. It is the baseline.