[EP-01] The Core Document Stack

Your will controls less than you think — the beneficiary forms are the real estate plan

Pillar: Estate Planning & Risk Management · Applies to: Everyone, at every net worth — the one article here with no wealth threshold Last verified: August 2026 · Refresh cadence: Evergreen (the framework); state-specific rules via ST-04 Related: EP-05 Estate & Inheritance Taxes · [EP-02] Trusts Beyond the Basics · [EP-06] Cognitive Decline Planning · TX-04 RMDs & Inherited IRAs · HC-04 HSA Mastery · ST-03 Changing Domicile · TR-05 Exit Logistics · ST-04 Quick-Reference Tables

Not advice. Wills, trusts, and powers of attorney are creatures of state law, and the execution formalities — witnesses, notarisation, self-proving affidavits — are exactly where do-it-yourself documents fail. A document that is invalid is worse than no document, because everyone relies on it until the moment it is tested. Use this page to know what to ask an attorney licensed in your state for.

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TL;DR

• Most of your money will never pass under your will. Beneficiary designations and titling move retirement accounts, insurance, and jointly-held property directly. The will governs the remainder. Getting the will right and the forms wrong is the most common estate-planning failure there is.
• Six documents. The two that operate while you are alive — the financial power of attorney and the healthcare proxy — are the ones people skip and the ones whose absence costs the most, because the alternative is a guardianship court.
• ERISA makes your current spouse the automatic beneficiary of your 401(k) unless they consent in writing ✅. IRAs have no such federal rule — so rolling a 401(k) into an IRA silently strips that protection ✅.
• Divorce does not fix the form. In Kennedy v. DuPont the Supreme Court paid the ex-wife who was still named, despite her explicit waiver in the divorce decree ✅; in Egelhoff it held that state “divorce revokes the ex-spouse” statutes are preempted for ERISA plans ✅.
• The sharpest asset-specific trap is the HSA. Name an adult child and the account stops being an HSA at your death — the full balance is ordinary income to them in one year. §4 works it: $50,564 of federal tax on a $180,000 HSA. Name your spouse and it is $0.

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1. What the will actually controls

Assets pass by a fixed hierarchy, and the will sits at the bottom of it:

Order	Mechanism	Covers	Beats
1	Beneficiary designation — POD, TOD, retirement plan forms, insurance	Retirement accounts, HSAs, life insurance, annuities, many brokerage accounts	Everything below, including the will
2	Titling — joint tenancy with right of survivorship, tenancy by the entirety, community property with right of survivorship	Homes, bank and brokerage accounts	The trust and the will
3	Trust	Whatever you actually retitled into it	The will
4	Will → probate	Everything left over	Nothing
5	Intestacy — the state’s default will	What a will would have covered, if you have none	—

For a typical retiree — 401(k), IRA, HSA, a house held jointly, a bank account with a POD — rows 1 and 2 move nearly the entire estate and row 4 handles the furniture. That is not an argument against having a will. It is an argument for treating the beneficiary forms as the primary planning document rather than an afterthought that a custodian collected once, years ago.

2. The six documents

Document	What it does	Operates	What breaks without it
Will	Directs probate assets; names the executor and guardians	At death	Your state’s intestacy statute distributes; a court picks the executor
Revocable living trust	Holds retitled assets; avoids probate; manages incapacity	Life and death	Nothing, if you don’t need it — see §5
Durable financial POA	Lets an agent handle money if you cannot	While alive	Conservatorship court — expensive, public, slow
Healthcare POA / proxy	Names who decides medical care	While alive	Statutory default decision-makers, or a court
Advance directive / living will	States your wishes on life-sustaining treatment	While alive	Your proxy guesses, under pressure
HIPAA authorization	Lets named people receive information	While alive	Providers may refuse to talk to your own family

The distinction that matters: three of these six are incapacity documents, not death documents. Death is a discrete event with a legal process attached. Incapacity is a slow, ambiguous state with no automatic process at all — and the only people who can act for you are the ones you named in advance. A “durable” POA is durable precisely because it survives your incapacity; a non-durable one dies exactly when you need it ◻️.

Two refinements worth naming:

• A pour-over will is the companion to a trust: it catches anything you forgot to retitle and pours it in. Everyone with a trust should have one.
• A springing POA, which takes effect only on a doctor’s certification of incapacity, sounds prudent and is often a practical trap ◻️ — banks litigate whether it has sprung. Most attorneys now favour an immediately-effective POA held in escrow.

3. Beneficiary hygiene

This is the highest-value hour in estate planning, and it is free.

The ERISA spousal rule, and the rollover that undoes it. For a 401(k) or other ERISA-governed plan, your current spouse is the beneficiary by law unless they sign a written, witnessed consent to someone else ✅. IRAs carry no such federal requirement ✅. So a routine rollover at retirement — 401(k) into an IRA, the default advice everywhere — removes a federal protection your spouse had and nobody mentions it (TR-05). In community-property states a state-law claim may partially survive ◻️. If you roll, re-execute the designation deliberately.

Divorce does not fix the form. Two Supreme Court cases decide this and both cut the same way:

• Egelhoff v. Egelhoff (2001) — state statutes that automatically revoke an ex-spouse’s beneficiary status on divorce are preempted for ERISA plans ✅. They generally do still apply to IRAs, which sit outside ERISA ◻️ — so the same divorce can revoke your ex on the IRA and leave them on the 401(k).
• Kennedy v. Plan Administrator for DuPont (2009) — the plan documents rule: the administrator pays whoever is named on the form, even where the ex-spouse expressly waived the benefit in the divorce decree ✅.

A divorce decree is not a beneficiary form. Only a beneficiary form is a beneficiary form.

The contingent line is the most-skipped field on the page. If your primary beneficiary predeceases you and no contingent is named, the account typically falls to your estate — which drags it through probate and, for a traditional IRA, can accelerate the payout schedule (TX-04). Naming your estate as beneficiary is almost always the worst available answer.

Per stirpes versus “my surviving children.” These differ only when a child predeceases you — and then they differ enormously. On a $900,000 IRA with three children, one of whom dies leaving two children of their own:

Designation	Child A	Child B	The two grandchildren
Per stirpes	$300,000	$300,000	$150,000 each
“To my surviving children”	$450,000	$450,000	$0

The deceased child’s branch is disinherited by $300,000 — as a default, not a decision. Many custodian forms default to the second reading unless you write per stirpes explicitly ◻️. Check what yours says.

Minors cannot inherit directly. Naming a minor puts the money under court-supervised custodianship until the age of majority, then hands them the lot outright. A trust named as beneficiary, or a UTMA custodian designation, is the fix — and for retirement accounts the trust must be drafted to qualify as a see-through trust, or the payout schedule collapses (TX-04).

4. Who to name on what

Beneficiary designation is an asset-allocation decision, because each asset carries a different tax to its heir.

Asset	Best heir	Why
Traditional IRA / 401(k)	Charity, or the lowest-bracket heir	No basis step-up ✅; heirs pay ordinary income under the 10-year rule (TX-04). A charity pays nothing
Roth IRA	Heirs	Ten more years of tax-free growth, then tax-free withdrawal — the best asset to inherit
HSA	Spouse, or charity	Never an adult child — see below
Taxable brokerage	Heirs	Full basis step-up erases the embedded gain (TX-01)
Life insurance	Heirs, or an ILIT if you have a state estate tax problem	Death benefit is income-tax-free, but in your estate if you own the policy (EP-05 §2)

The HSA trap, worked. An HSA is the only major account that simply stops being itself at your death if a non-spouse inherits it: it ceases to be an HSA on the date of death, and the full fair market value is ordinary income to the beneficiary in that single year ✅.

A $180,000 HSA. The adult child named on it is single and earns $120,000 — taxable income $103,900 after the standard deduction, sitting in the 22% band ✅ (FN-02).

	Taxable income	Federal tax
Before	$103,900	$17,570
After inheriting the HSA	$283,900	$68,134
		+$50,564 on the HSA — a 28.1% effective rate

The inherited balance starts in the 22% band and finishes in the 35% band, in one year, with no ability to spread it. Name your spouse and the tax is $0 — the account simply becomes theirs ✅. Name a charity and it is $0 to anyone. The beneficiary can reduce the taxable amount by the decedent’s qualified medical expenses paid within one year of death ✅, which recovers a fraction, not the trap.

This is one line on one form, and it is worth $50,564. (HC-04)

5. Probate, and when a trust earns its fee

Probate is the court process that validates a will and supervises distribution. Its real costs are time, publicity, and legal fees, all of which vary enormously by state ◻️ — which is why national claims about “avoiding probate” are worth so little. In some states it is a brief formality; in others it is a year and a meaningful percentage of the estate.

Before buying a trust, price the cheap alternatives, which handle most estates:

• POD/TOD designations on bank and brokerage accounts — free, instant, and they outrank the will.
• Transfer-on-death deeds for the house — now available in 32 U.S. jurisdictions ✅, with the Uniform Act itself enacted in 19 states plus DC and the U.S. Virgin Islands ✅ (Idaho’s took effect July 1, 2026 ✅). A TOD deed does for real property what a POD does for a bank account.
• Joint titling, with the warning that adding a child as joint owner exposes the asset to their creditors and divorce, and gifts them a share of your basis rather than giving them a step-up.

A trust genuinely earns its cost when: you own real property in more than one state (otherwise: ancillary probate in each); you want privacy (a will is a public record, a trust generally is not); you need seamless management during incapacity; you have a blended family and want to control where assets go after your spouse’s death; you have a beneficiary with a disability whose means-tested benefits a direct inheritance would destroy; or you are in an estate-tax state and need the credit-shelter structure (EP-05 §5, [EP-02]).

The classic failure is the unfunded trust. A trust controls only what has been retitled into it. People pay for the document, never move the house or the accounts, and their heirs get the probate they paid to avoid — plus a trust. A trust is a task, not a purchase. Retirement accounts are the deliberate exception: they normally stay outside the trust and pass by designation.

6. Keeping it alive

Estate documents fail by going stale far more often than by being wrong when drafted. Re-open the file on any of these:

Marriage · divorce · a death in the family · a birth or adoption · a move to another state · a 401(k) rollover · opening any new account · a beneficiary’s disability, addiction, or creditor trouble · a change in state law.

The move is the one this wiki’s readers hit most. Your documents are valid across state lines as a general matter ◻️, but the defaults, formalities, and spousal-rights regimes are not the same — community property versus common law is a different legal universe (ST-01 dimension 6) — and a will reciting your old domicile is affirmative evidence against you in a residency audit (ST-03).

Three Scenarios

A. The rollover that disinherited a spouse. He retires, rolls his $1.4M 401(k) to an IRA on his advisor’s recommendation, and never touches the beneficiary form — which the custodian populated from an old workplace record naming his brother. Under ERISA his wife had been the beneficiary automatically ✅; in the IRA she has no such right ✅. The rollover was the estate-planning event and nobody treated it as one. Fixed in five minutes, had anyone looked.

B. The tidy estate with the untidy forms. She has a will, a funded revocable trust, POAs, and a healthcare directive — a genuinely good stack, drafted before her divorce. Her ex-husband remains the named beneficiary on the 401(k). Under Kennedy the plan pays him ✅, and the divorce decree’s waiver does not stop it. Every document she paid for is irrelevant to the largest asset she owns.

C. The couple who named the kids on everything. Both 70, wanting to “keep it simple,” they name their two adult children as primary beneficiaries on all accounts — including the HSA and including, before the survivor’s death, each other’s IRAs. The HSA alone costs the children $50,564 in a single year (§4). Re-pointing the HSA to the spouse and the traditional IRA to the more charitable of their two intentions recovers most of it, and takes one afternoon.

💡 Pro-Tips

1. Do the beneficiary audit before you buy any document. Pull every account and policy, list the primary and contingent beneficiary on each, and compare to what you actually want. Most people find at least one error.
2. Treat a 401(k) rollover as an estate-planning event — it moves you out of ERISA’s spousal protection (TR-05).
3. Write “per stirpes” explicitly if you want a predeceased child’s branch to inherit. Do not rely on the form’s default.
4. Never name your estate as beneficiary, and never leave the contingent line blank.
5. Point the HSA at your spouse or a charity. It is the single most expensive beneficiary line in a typical retiree’s file.
6. Give the healthcare proxy and HIPAA authorization to the people who will actually be in the room, and put copies where they can be reached at 2 a.m. — not in the safe deposit box only you can open.
7. If you have a trust, verify it is funded. Ask for the schedule of assets and check the deed and account titles yourself.
8. Re-execute the whole stack after moving states, both for validity and because the old document is evidence of old domicile (ST-03).

⚠️ Common Pitfalls

1. Believing the will controls the retirement accounts. It does not, and they are usually the largest asset.
2. Leaving the contingent beneficiary blank, sending the account to the estate and into probate.
3. Assuming divorce revoked the ex-spouse. For ERISA plans it did not ✅ — and a decree waiver does not either.
4. Rolling a 401(k) to an IRA without re-executing the beneficiary designation.
5. Naming an adult child on the HSA — a five-figure error on one line (§4).
6. Naming a minor directly, triggering court custodianship and an outright handover at 18 or 21.
7. Buying a trust and never funding it — paying for probate avoidance and getting probate.
8. Adding a child as joint owner of the house to “avoid probate,” exposing it to their creditors and forfeiting their step-up.
9. Having only a springing POA and discovering the bank will not honour it ◻️.
10. Storing the originals where the executor cannot get them, including a safe deposit box that requires a court order to open.
11. Naming a trust as IRA beneficiary without see-through drafting, collapsing the payout schedule (TX-04).
12. Never revisiting. The stack silently rots at every life event in §6.

✅ Actionable Checklist

This week — free, and the highest-value item here

• List every account and policy: 401(k)s, IRAs, HSA, brokerage, bank, life insurance, annuities, pensions
• Record the primary and contingent beneficiary on each; flag every blank and every stale name
• Confirm per stirpes wording where you want it
• Re-point the HSA to your spouse or a charity
• Sort pre-tax, Roth, and taxable accounts by best heir (§4)

The documents

• Will (with executor and, if relevant, guardians named) · pour-over will if you have a trust
• Durable financial POA · healthcare POA/proxy · advance directive · HIPAA authorization
• Decide, with reasons, whether a trust earns its cost (§5) — and if you have one, verify it is funded
• Consider TOD deeds or POD designations as the cheaper route where they suffice

Make it findable

• Tell the executor and healthcare proxy that they hold the role, and where the originals are
• Leave written access instructions for digital accounts — fiduciary access is governed by state adoptions of RUFADAA and by each provider’s own tools ◻️

Review triggers

• Re-open the file on any event in §6; otherwise re-read the whole stack every 3 years

State notes (→ ST-01, ST-04): Everything on this page is state law. Execution formalities differ — witness counts, notarisation, and whether a self-proving affidavit is available ◻️ — and a document valid where signed is generally honoured elsewhere but not always in the way you expect. Community-property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI ✅) give a spouse rights that common-law states handle through elective-share statutes instead, which changes what you can leave away from a spouse (ST-01 dimension 6). Transfer-on-death deeds exist in 32 jurisdictions ✅ and nowhere else, so the cheap probate workaround for the house is available to some readers and not others. Probate cost and duration vary enough that “avoid probate” is good advice in some states and irrelevant in others ◻️. State revocation-on-divorce statutes reach IRAs but are preempted for ERISA plans ✅. If you are in an estate- or inheritance-tax state, the document stack has a tax job too — see EP-05 and ST-04 §2.

Sources & further reading (verified August 2026)

• ERISA § 205 (29 U.S.C. § 1055) — the qualified joint and survivor annuity and spousal consent rules for plan beneficiaries
• Egelhoff v. Egelhoff, 532 U.S. 141 (2001) — ERISA preemption of state automatic-revocation-on-divorce statutes
• Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009) — the plan documents rule; a divorce-decree waiver does not redirect payment
• IRS Pub. 969 and IRC § 223(f)(8) — HSA treatment at death: spouse beneficiary continues the account; a non-spouse beneficiary includes fair market value in income in the year of death, reduced by the decedent’s qualified medical expenses paid within one year
• Uniform Law Commission, Uniform Real Property Transfer on Death Act — enacted in 19 states plus DC and the USVI; 32 U.S. jurisdictions permit TOD deeds by uniform or non-uniform statute (ABA Probate & Property, Uniform Laws Update, 2025)
• Uniform Law Commission, Revised Uniform Fiduciary Access to Digital Assets Act — adopted in nearly all states; counts in circulation conflict, so confirm your own ◻️
• TX-04 for inherited retirement account payout rules and see-through trusts · EP-05 for the transfer-tax job of these documents · HC-04 for the HSA during life · ST-04 for state lists