Every adult needs a plan for what happens to their assets and loved ones after death. For many, that plan starts with a will—a legal document that's been the cornerstone of estate planning for centuries. While trusts often steal the spotlight in conversations about wealth transfer for high-net-worth individuals, wills remain essential documents that serve purposes trusts cannot. Understanding what wills do, how they work, and their limitations can help you build a comprehensive estate plan.
What Is a Will?
A will, formally called a last will and testament, is a legal document that specifies how you want your property distributed after your death, who should serve as guardian for your minor children, and who should manage your estate through the probate process.
Unlike a trust, which takes effect during your lifetime, a will only becomes operative after your death. During your lifetime, a will has no legal effect—you can change it freely, and it doesn't affect how you manage or use your property.
A will must meet specific legal requirements to be valid. These vary by state but typically include being in writing, signed by you, and witnessed by at least two people who are not beneficiaries under the will. Some states also allow holographic wills—handwritten wills without witnesses—though these come with additional requirements and potential challenges.
What a Will Accomplishes
The primary function of a will is directing asset distribution. You specify who receives what property and in what proportions. You can leave specific items to specific people, divide assets by percentages, or create more complex distribution schemes based on your wishes.
For high-net-worth individuals, a will allows you to ensure your wealth benefits the people and causes you care about most. You can provide for family members, make charitable bequests, and leave specific instructions about items with sentimental value that might otherwise cause family disputes.
Perhaps equally important, a will lets you name guardians for minor children. If you have children under 18, designating who should raise them if both parents die is one of the most critical decisions in estate planning. Only a will allows you to make this designation—trusts cannot appoint guardians for children.
A will also names your executor, the person responsible for managing your estate through probate. This includes gathering assets, paying debts and taxes, and distributing property to beneficiaries. Choosing a capable, trustworthy executor is essential for efficient estate administration.
How the Probate Process Works
When you die with a will, your estate goes through probate—the legal process of validating your will, settling your debts, and distributing your assets. Your executor files the will with the probate court, which validates it and grants the executor authority to act.
The executor then inventories your assets, notifies creditors, pays debts and taxes, and eventually distributes remaining assets to beneficiaries according to your will. Depending on your state and estate complexity, probate can take several months to over a year and cost anywhere from 3% to 7% of the estate's value in legal fees, executor fees, and court costs.
Probate is a public process. Your will becomes a public record, and anyone can see what you owned and who received it. For high-net-worth individuals who value privacy, this public disclosure can be an unwanted consequence of relying solely on a will.
Different states have different probate processes. Some states have streamlined procedures for smaller estates, while others require full formal probate regardless of estate size. If you own property in multiple states, your estate may require ancillary probate in each state—an expensive and time-consuming complication.
Will vs. Trust: Understanding the Key Differences
The comparison between wills and trusts often confuses people. They're not mutually exclusive—many comprehensive estate plans include both. But understanding their different characteristics helps you use each effectively.
A will only takes effect at death and must go through probate. A revocable living trust takes effect during your lifetime and avoids probate. A will is simpler and less expensive to create initially. A trust requires more upfront time and cost but can save money and hassle after death.
A will is a public document once probated. A trust remains private. A will doesn't help if you become incapacitated during your lifetime. A trust allows your designated trustee to manage assets if you become unable to do so.
A will allows you to name guardians for minor children. A trust cannot. A will covers all assets you own at death. A trust only controls assets you've transferred into it.
For most high-net-worth individuals, the optimal solution involves both a will and a trust, with each serving its appropriate function.
What Happens If You Die Without a Will
Dying without a valid will means dying "intestate." In this situation, state law determines who inherits your property through intestacy statutes. The distribution may not align with your wishes at all.
Intestacy laws typically prioritize spouses and children, but the specific formula varies by state. If you're unmarried with no children, your property might go to parents, siblings, or more distant relatives. If no relatives can be found, your property ultimately goes to the state.
Without a will, you have no say in who serves as executor or who becomes guardian for your children. The court appoints someone, which may not be who you would have chosen. For high-net-worth individuals with complex assets or specific wishes, dying intestate can create significant problems and family conflict.
Common Mistakes With Wills
Many people make wills but fail to update them as circumstances change. Marriage, divorce, births, deaths, significant wealth changes, or moves to different states all warrant will updates. A will written 20 years ago may no longer reflect your current wishes or situation.
Failing to coordinate your will with beneficiary designations is another common error. Life insurance, retirement accounts, and payable-on-death accounts pass directly to named beneficiaries regardless of what your will says. These designations should align with your overall estate plan.
Some people create wills but leave them unsigned or improperly witnessed, rendering them invalid. Others use online will templates without understanding state-specific requirements, creating documents that may not hold up in court.
Attempting to use a will to control property you don't own won't work. If you've transferred property to a trust, named beneficiaries on accounts, or hold property jointly with right of survivorship, your will doesn't control those assets.
When a Simple Will Is Sufficient
Not everyone needs complex trust arrangements. If your estate is modest, you have straightforward distribution wishes, you don't own property in multiple states, and you value simplicity over probate avoidance, a well-drafted will may be sufficient.
For some people, the public nature of probate isn't a concern, and the cost and hassle of probate don't outweigh the simplicity of just having a will. If you're primarily leaving everything to a spouse or dividing assets equally among children, a will accomplishes this effectively.
However, as wealth increases and situations become more complex—business ownership, real estate in multiple states, blended families, beneficiaries with special needs, or concerns about beneficiaries' ability to manage inheritances—trusts become increasingly valuable supplements to basic will planning.
Essential Will Provisions for High-Net-Worth Individuals
For wealthy individuals, certain will provisions become particularly important. A residuary clause catches any assets not specifically mentioned elsewhere, ensuring nothing is left unaddressed. Tax clauses specify how estate taxes should be paid and from which assets.
Specific bequests can provide meaningful items to specific people while avoiding family disputes over sentimental property. Disinheritance clauses clearly state if you're intentionally not providing for someone who might otherwise expect an inheritance, reducing the likelihood of successful will contests.
Provisions for digital assets—access to online accounts, social media, cryptocurrency, and digital files—are increasingly important in modern estate planning.
The Importance of Professional Will Preparation
While online will templates and DIY options exist, the potential cost of mistakes makes professional preparation wise for anyone with substantial assets. An experienced estate planning attorney can ensure your will is properly drafted, executed, and coordinated with your overall estate plan.
Your financial advisor should be involved in the planning process to ensure your will aligns with your financial strategy and that asset titling supports your estate plan. Your CPA can advise on tax implications of different distribution strategies.
The relatively modest cost of professional will preparation is a worthwhile investment to ensure your wishes are legally enforceable and your loved ones are properly provided for.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Wills involve legal requirements that vary by state. Consult with a qualified estate planning attorney regarding your specific circumstances.
Having a will is important, but it's only one component of comprehensive estate planning. Work with experienced professionals to create a plan appropriate for your situation.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor and separate entity from LPL Financial.
Chesapeake Financial Planners | 2402 Scotlon Ct, Forest Hill, MD 21050 | (410) 652-7868 | www.chesapeakefp.com
