“A ‘Simple’ Estate Plan Is Not What You Think”
There’s a certain type of estate plan that clients will describe as “simple,” and every time I hear it, I know we’re about to head in the exact opposite direction. What sounds simple on the surface often turns into something far more complicated once you look at how it actually functions over time.
I’ve started using a framework to explain this to clients because once they see it laid out, the issue becomes much easier to understand. I call it the DEFCON scale—Difficult Estate Format Chaos Overload Number. At DEFCON-1, you have a clean, percentage-based plan where assets flow according to a structure that can adapt as life changes. At DEFCON-5, everything is individually assigned, cross-referenced, and dependent on
assumptions about the future that almost never hold up.
THE DEFCON SCALE
Before getting into the story, it helps to understand what each DEFCON level actually looks like in practice, because most clients don’t realize where they fall on this scale until it’s explained clearly.
At DEFCON-1, the plan is almost entirely percentage-based. The client is leaving everything to beneficiaries either equally per stirpes or equally per capita, with no specific bequests other than perhaps a personal property memorandum. This is the most flexible and durable structure because it does not depend on what specific assets exist at the time of death.
At DEFCON-2, the plan is still largely percentage-based, but there are one or two specific items carved out. A common example is an inherited account where one spouse wants that account they got from their parents to go directly to their children if they pass before the other spouse. Outside of those limited exceptions, the rest of the estate still flows by percentage.
At DEFCON-3, the plan starts to shift toward more specific assignments. There may be a few large assets—such as real estate or significant accounts—that are directed to particular individuals, which means there needs to be changes as those assets change, but the remaining portion of the estate is still distributed by percentages. Those percentages may not be equal, but there is still a meaningful portion of the estate that is handled in a flexible way.
At DEFCON-4, most of the estate is being distributed through specific asset assignments, and they are trying to use pay-on-death designations rather than the actual revocable living trust to avoid probate. The plan now includes a list of properties, accounts, and investments that are tied directly to named beneficiaries. The remainder of the estate may still pass by percentage, but it represents a relatively small portion of the overall estate. At this level, changes in assets often require updates to the estate plan because the structure is no longer flexible.
At DEFCON-5, virtually every asset, account, and item is assigned. Each asset has a designated beneficiary, and many of those assignments include their own contingency provisions that may not follow a consistent pattern. The remainder of the estate, if it is addressed at all, is treated as an afterthought—often going to next of kin or charities simply because the client did not consider those assets important enough to plan for. At
this level, almost any change in assets or beneficiaries creates a need to revise the plan.
The DEFCON-5 Story
With the above framework in mind, here is a DEFCON-5 story.
I was working with a married couple in a second marriage. Each of them had children from prior relationships, so they were doing what many blended families do. Each spouse created their own trust, controlled their own assets, and named their own beneficiaries. They also agreed on a couple of specific provisions for two properties so that the surviving spouse could continue to use those properties during their lifetime, with the properties ultimately going to the respective children after both spouses had passed. From a structural standpoint, that part of the plan made sense and was handled appropriately.
Where things started to diverge was how each spouse wanted to handle the rest of their estate.
One spouse took a DEFCON-1 approach. After accounting for the specific provisions we discussed, everything else went to their children equally per stirpes. It was straightforward, flexible, and durable. If an account changed, if a property was sold, or if a new asset was acquired, the plan would still function exactly as intended because it was based on percentages of the overall estate rather than a fixed list of assets.
The other spouse refused to structure the plan that way. Instead of using percentages, they wanted to assign every single asset. Every property, every bank account, and every investment account had to be specifically designated to a particular beneficiary or group of beneficiaries. In some cases, if that beneficiary passed away, the asset would go to their children. In other cases, it would go to entirely different individuals. There was no consistent pattern, and no willingness to step back and apply a broader structure.
When I asked what would happen to everything else that wasn’t listed, the response was immediate and confident. “I don’t own anything else.” That answer is something I hear more often than you might expect, and it always reflects the same misunderstanding. Estate planning is not about documenting what you own today. It is about creating a system that will still work years from now when what you own has inevitably changed.
I pointed out that accounts change over time. People switch banks. Investment companies merge or get acquired. Clients consolidate accounts or open new ones for entirely practical reasons that have nothing to do with estate planning. The response I received was that they would never change banks or investment companies. That kind of certainty might feel reassuring in the moment, but it does not reflect how life actually
unfolds.
So I tried a different angle. I mentioned that they had talked about replacing some appliances and asked how those items would be distributed. That was apparently where the conversation became “ridiculous.” The assumption was that only the assets they currently viewed as important needed to be addressed, and anything outside of that category didn’t deserve attention.
At that point, I asked one more question. If there truly wasn’t anything else worth having, then why not name me as the beneficiary of everything not specifically listed? That question had the intended effect, because it forced a shift from abstract thinking to a very real outcome. If you refuse to plan for the unknown, then you are effectively leaving those assets to chance—or worse, to results you would never intentionally choose.
The Core Problem
That is the core problem with DEFCON-5 planning. It feels precise, and it gives the illusion of control, but it only works if nothing changes. The entire structure depends on a frozen moment in time, and the moment life moves forward, the plan starts to break down.
Accounts will be closed or moved. New assets will be acquired. Properties will be sold. Beneficiaries may pass away or their circumstances may change. When a plan is built on assigning specific assets rather than applying a flexible structure, every one of those changes creates a need to revisit and potentially rewrite the plan. What was intended to be simple becomes a constant maintenance obligation.
By contrast, a DEFCON-1 plan is built to absorb those changes. When the core of the plan is based on percentages of the overall estate, with clear and consistent contingent beneficiaries, the plan continues to function regardless of how the asset list evolves. You can still carve out specific bequests where it makes sense, but those should be limited exceptions rather than the foundation of the entire plan.
The goal of estate planning is not to create a perfectly detailed inventory of everything you own at a single point in time. The goal is to create a plan that continues to work as your life changes, without requiring constant intervention to keep it intact.
When a plan requires you to update it every time you open a new account, change financial institutions, sell a property, or replace household items, that is not simplicity. That is a system that is fragile by design.
That is DEFCON-5
If you’re not sure where your plan falls on the DEFCON scale—or you’re starting to realize it may be more complicated (and more fragile) than it needs to be—I walk through this in plain English in my free course. It will help you understand how to structure your estate plan so it actually works over time instead of needing constant fixes.
You can check that out at www.FreeTrustCourse.com