The estate attorney finished the plan in the spring. Pour-over will, revocable trust, funding instructions. The trust was designed to hold the appreciated equity positions and the taxable investment accounts. The IRAs would name the trust as beneficiary, channeling retirement assets through the distribution provisions the attorney had carefully structured. The plan was coordinated and correct.
The wealth manager opened a new joint account with the client’s spouse that summer to simplify trading access. The assets that were supposed to fund the trust were now titled jointly. Joint accounts pass directly to the surviving owner at death. They do not pass through the will. They do not fund the trust.
The trust, carefully drafted, received nothing.
What the estate plan assumes
An estate plan is built against a specific financial picture. The attorney knows what the client owns, how those assets are titled, and which accounts have which beneficiary designations. The plan is designed around those facts: which assets flow through the will or trust, which pass directly by beneficiary designation, which bypass the estate entirely because they are jointly titled.
The pour-over will is designed to catch assets that were not in the trust during the client’s lifetime. The trust provisions are written to distribute those assets according to the client’s intent. The beneficiary designations on retirement accounts are set to channel those assets through the trust’s distribution structure or to named individuals, depending on what the tax and estate analysis recommended.
All of that design depends on the assets being where the plan assumed they would be.
When the portfolio moves
The wealth manager’s decisions change where assets sit without changing the estate documents.
Account titling changes are routine. A new joint account improves trading convenience. An account gets retitled when a spouse is added or removed. A new custodian account gets opened. Each of these changes affects how assets pass at death, and none of them reaches the estate attorney’s office.
Asset location decisions move assets between account types. Appreciated equities may move from a taxable account into an IRA. Tax-inefficient assets move from the IRA to the taxable account. These moves affect something the estate plan cares about: the step-up in basis.
The step-up problem
Assets held in a taxable account receive a step-up in basis at the owner’s death. The heir’s cost basis resets to the fair market value on the date of death. The capital gain that accumulated during the owner’s lifetime disappears. The heir can sell immediately with no income tax on the appreciation.
Assets held in a traditional IRA or 401(k) receive no step-up. When the heir withdraws the funds, they pay ordinary income tax on the full amount, including all the growth that accumulated over decades of compounding.
An estate plan designed for tax efficiency often assumes that appreciated assets are in taxable accounts, where the step-up applies, and that tax-deferred accounts will eventually be drawn down during the owner’s lifetime. If the wealth manager has moved appreciated positions into the IRA for asset location reasons, the heir who receives those assets will owe ordinary income tax on gains the estate plan assumed would be eliminated at death.
The wealth manager’s asset location decision was correct from a portfolio perspective. The estate plan was correct when it was drafted. Nobody compared the two.
What the estate attorney is reviewing
When the client asks the estate attorney to review the plan, the attorney reviews the documents. The trust agreement. The will. The beneficiary designation forms on file. The attorney can confirm that the documents reflect the client’s current intent.
What the attorney cannot confirm: whether the assets that were supposed to fund the trust are still titled to fund it. Whether the assets that were supposed to receive a step-up are still in taxable accounts. Whether the beneficiary designations on record still match the strategy behind them.
That information lives at the custodian, in the portfolio management software, and in the wealth manager’s files. It is not in the attorney’s documents. The review that looks only at the documents sees only part of the picture.
The coordination the plan depends on
The estate plan is not a snapshot of a moment. It is an instruction set for a financial structure that keeps changing. Every account that gets retitled, every asset that moves between account types, every new account that gets opened without a corresponding trust funding instruction changes the terrain the plan is designed to navigate.
The attorney who drafted the plan knew exactly what the financial structure looked like that day. Whether the plan still does what it was designed to do depends on what changed in the portfolio since then, and whether anyone told the attorney.
