A Will Isn't Enough to Skip a Probate Nightmare— You Need This

Speaker 1 I live in LA now, but lately I have been craving the seasons. Snow, hot cocoa, the whole thing.

Speaker 1 I don't even ski, but I have been daydreaming about working remotely from somewhere really cozy on the East Coast, like a cute little ski town for a little bit.

Speaker 1 And whenever I know I'm going to be gone for a while, I always remind myself that my home can actually be working for me while I'm away because I host my space on Airbnb.

Speaker 1 It is one of the easiest ways to earn passive income from something you already have, and that extra income feels particularly helpful this time of year as we approach the holidays. holidays.

Speaker 1 A lot of my friends say that sounds amazing, but where do you find the time to manage guests and bookings? And that's when I tell them about Airbnb's co-host network.

Speaker 1 Through Airbnb, you can find a local co-host who can help you set up your listing, handle reservations, communicate with guests, provide on-site support, even help with design and styling.

Speaker 1 I like to give a personal touch when I'm hosting on Airbnb. So I make a list of my favorite restaurants in the area and I hand write a note welcoming my guests to the property.

Speaker 1 My guests love it, but I also know that some of those little personal touches can take a lot of extra time. So this is the exact kind of thing that you would want your co-host to help you with.

Speaker 1 Whether you're traveling for work or chasing the snow or escaping it, or you've got a second place that just sits there empty more often than you'd like, your home doesn't have to just sit there.

Speaker 1 You can make extra money from it without taking on extra work. Find a co-host at airbnb.com slash host.

Speaker 2 Here's one piece of advice that I've given for years. Build an emergency fund.
Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 2 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 2 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 2 That's why it's so important to choose one that makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. Chime understands that every every dollar counts.

Speaker 2 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 2 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, QIIME has spotted members over $30 billion.

Speaker 2 Work on your financial goals through QIIME today. Open an account in just two minutes at chime.com/slash MNN.
That's chime.com/slash MNN. Chime feels like progress.

Speaker 3 Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bank Bank NA or Stripe Bank NA.
Members of DIC.

Speaker 3 Spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file.

Speaker 3 Fees apply at out-of-network ATMs, bank ranking, and number of ATMs, according to US News and World Report 2023. Chime, checking account required.

Speaker 2 Here's one piece of advice that I've given for years: build an emergency fund. Aim to stash away enough to cover at least three months of expenses in case your income suddenly drops.

Speaker 2 Sounds simple, right? But let's be honest, it's not. Saving even one month's worth of living costs can feel impossible.

Speaker 2 Just when you're making progress, that check engine light blinks on and derails your plans. Life already throws enough curveballs.
You don't need your bank adding to the chaos.

Speaker 2 That's why it's so important to choose one that makes savings easy and doesn't nibble away at your hard-earned money with ridiculous fees. QIIME understands that every dollar counts.

Speaker 2 That's why when you set up direct deposit through QIIME, you get access to fee-free features like free overdraft coverage, getting paid up to two days early with direct deposit, and more.

Speaker 2 With qualifying direct deposits, you're eligible for free overdraft up to $200 on debit card purchases and cash withdrawals. To date, CHIIME has spotted members over $30 billion.

Speaker 2 Work on your financial goals through QIIME today. Open an account in just two minutes at chime.com/slash MNN.
That's chime.com slash MNN. Chime feels like progress.

Speaker 3 Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bankor Bank NA or Stripe Bank NA.

Speaker 3 Members, FDIC, spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file.

Speaker 3 Fees apply at out-of-network ATMs, bank ranking, and number of ATMs according to US News and World Report 2023. Chime checking account required.

Speaker 2 I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand.

Speaker 1 It's time for some money rehab.

Speaker 1 Let me tell you a tragic story that I have heard way too many times now.

Speaker 1 Someone passes away, their spouse or their kids or their loved ones goes to access their money, and then they're told that the account is frozen.

Speaker 1 Even if there was a will, even if everything seemed in order, the bank can't help, the investments are locked up. Why? One word, probate.

Speaker 1 I did a video on this on Instagram and it went more viral than almost anything I have ever posted. So today I want to go deeper.

Speaker 1 Today I want to talk about what actually happens to someone's bank account when they pass away and more importantly, what we should all be doing with our assets to protect our loved ones.

Speaker 1 Because the truth is, losing someone is already incredibly hard. Your finances shouldn't make it harder.

Speaker 1 I know this is not a fun, light topic, but because my video on this was shared almost 200,000 times, I knew it struck a chord.

Speaker 1 So let's talk about what probate is, why even having a will might not be enough, and the three simple things you can do right now to protect your money, your privacy, and your family.

Speaker 1 We know the word probate is a dirty word, but why? Well, probate is a legal process of settling someone's estate after they die.

Speaker 1 It's essentially the court's way of validating your will if you have one, figuring out who your heirs are, paying off your debts, and distributing your assets.

Speaker 1 Now, that sounds very reasonable on paper, but here's the problem: probate can take months, sometimes years, and your loved ones cannot touch a dime of your money until it's all sorted out.

Speaker 1 Also, it's public, which means anyone can just look up the value of your estate and who got what, which is not ideal.

Speaker 1 And the worst part, it can cost anywhere from three to seven percent of your estate in legal fees, filing fees, and more. And that's if everything goes smoothly.

Speaker 1 If there are disputes, debts, or missing paperwork, it takes even longer and gets even more expensive.

Speaker 1 So while a will is important and we'll talk about that, it's not your magic pass for your family to skip the line. So let's be super clear about what your will does and what your will does not do.

Speaker 1 A will is like a set of instructions. It basically tells the court who should get what.
It can name guardians for your kids.

Speaker 1 It can spell out who gets the house or whatever assets you want to go to your heirs, but it still goes through probate. Again, a will does not bypass the court system.

Speaker 1 It simply tells the court how to distribute your stuff. The court still has to validate that will, appoint an executor, and oversee the whole process.

Speaker 1 And that means your loved ones could be waiting months to access even basic things like the money in your checking account.

Speaker 1 So if you want to keep certain assets out of probate, you need specific tools for that. And that's where TODS, PODS, and TRUSTs come in.

Speaker 1 Pods, which stands for payable on death, and TODS, which stands for transfer on death, are two of the easiest and most effective ways to pass on your money without going through probate.

Speaker 1 A pod applies to checking accounts, savings accounts, certificates of deposit. You literally just fill out a form for this at your bank.

Speaker 1 If someone has a pod, when they die, the money goes straight to their beneficiaries, no court involved.

Speaker 1 A TOD applies to brokerage accounts, so stocks, bonds, and some retirement accounts, although IRAs and 401ks usually have their own beneficiary designations.

Speaker 1 So while they apply to different assets, pods and TODs achieve the same goal. You name someone who gets the assets after you die, and it transfers immediately, bypassing probate entirely.

Speaker 1 That's the part that nobody tells you.

Speaker 1 Everybody thinks that a will is a golden ticket, but in reality, if you don't have pods and tods in place, your family might not be able to get access to your bank account for months.

Speaker 1 Now, let's talk about trusts. Trusts are another powerful way to avoid probate, especially for larger or more complicated estates.

Speaker 1 A revocable trust lets you move your assets, your home, your investments, even your business into a legal entity that you still control during your lifetime.

Speaker 1 When you die, the trust lives on and your chosen trustee distributes the assets without court involvement. Trusts honestly aren't as common as they should be.

Speaker 1 And frankly, that's because they just sound very expensive and complicated. And setting up a revocable trust isn't nothing.

Speaker 1 You might spend up to $2,000, but it could save your heirs tens of thousands of dollars in probate fees later. The key with trusts is follow through.

Speaker 1 A trust only works if you title your assets into it. If you set up a trust and forget to move your house into it, it still goes through probate.
In that way, it's kind of like a brokerage account.

Speaker 1 I see a lot of people transfer money into a brokerage account and assume that means that money is invested. It's not.
Setting up the account is just step one. Same goes with trusts.

Speaker 1 Creating a trust is only step one. Don't forget step two, which is put your assets into that trust.
That's where most people mess up. They do one of the things, but not all the way.

Speaker 1 They make a will, but don't add Tods or Pods. They set up a trust, but forget to fund it.
They name a beneficiary on their IRA, but leave their bank account floating in legal limbo.

Speaker 1 And here's why all of this matters. When someone dies, the first thing the survivors need is access to the money to pay for funeral expenses, legal costs, mortgage payments, medical bills.

Speaker 1 Life keeps moving even after death. Life is not free, unfortunately.

Speaker 1 If everything is locked up in probate, your loved ones may have to use credit cards, take out loans, or even fight in court just to access the money that you meant for them.

Speaker 1 So yes, a will matters, but it is not enough. What really protects your family is access, and access comes from avoiding the court bottleneck through tods, pods, and trusts.
And that is it. We did it.

Speaker 1 We tackled probate, which again is not the sexiest topic on the planet, but it's one of the most powerful and impactful money moves that you can possibly make. You work so hard to build your wealth.

Speaker 1 Don't let the court system decide what happens to it after you're gone. And by the way, if this episode sparked an, oh no, I have not done any of this moment, good.
That is the whole point.

Speaker 1 Now you know and now you can act. If you found this helpful, please send it to a friend because odds are they haven't done it either.
For today's tip, you can take straight to the bank.

Speaker 1 Here's a cheat sheet for your next steps. For every account you own, checking, savings, brokerage, retirement, ask yourself these three questions.
Number one, does this account have a beneficiary?

Speaker 1 If yes, is it up to date? If no, add one. Ask your bank or your broker for a TOD or POD form.
Number two, is this asset in my trust?

Speaker 1 If you have a trust, make sure your house deeds, your investment accounts, and any other significant assets are titled in the name of the trust.

Speaker 1 And three, walk through the actual chain of events of what you think will happen when each of your assets gets inherited. If your answer is it'll just go to them, well, cool, but how?

Speaker 1 And if the answer includes the word probate, make a plan to fix that. Don't assume your financial advisor, accountant, or lawyer has done this for you.

Speaker 1 And once it's done, you will sleep much better at night knowing that you have done the hard thing for the people you love most.

Speaker 2 Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.
Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.
Do you need some Money Rehab?

Speaker 2 And let's be honest, we all do.

Speaker 2 So email us your money questions, moneyrehab at moneynewsnetwork.com, to potentially have your questions answered on the show or even have a one-on-one intervention with me.

Speaker 2 And follow us on Instagram at MoneyNews and TikTok at MoneyNews Network for exclusive video content. And lastly, thank you.
No, seriously, thank you.

Speaker 2 Thank you for listening and for investing in yourself, which is the most important investment you can make.