Money Rehab with Nicole Lapin - A Will Isn't Enough to Skip a Probate Nightmare— You Need This

Episode Date: August 26, 2025

When someone passes away, their assets can get locked up in probate court—leaving loved ones stuck in a legal and financial mess. Today, Nicole breaks down what probate really means, why a will alone won’t keep your family out of it, and the smart moves you can make right now to protect what you’ve built. This podcast is for informational purposes only and does not constitute financial, investment, or legal advice. Always do your own research and consult a licensed financial advisor before making any financial decisions or investments. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC.  *APY as of 6/30/25, offered by Public Investing, member FINRA/SIPC. Rate subject to change. See terms of IRA Match Program here: public.com/disclosures/ira-match.

If you take only one thing away from today's episode, money rehabbers, let it be this. In my not so humble opinion, Public is the best brokerage for investing in bonds, stocks, ETFs, options, and even crypto. You can try it out for yourself and see why I love it so much at public.com slash money rehab. Public is legit the only platform I use to buy bonds. Before Public, I used to buy government bonds the hard way. Slow websites, confusing interfaces, website designs straight out of the early 2000s. Just picture where fun goes to die.

That was it. And then I found Public. About five years ago, and I have not looked back. I can now finally buy bonds without wanting to rip my hair out. Public makes it so easy to buy bonds, whether you're into treasuries or corporate bonds, you can browse thousands of options right from your phone. But like I said, public isn't just all about bonds. You can also find stocks and ETFs, and they offer a high-yield cash account with a 4.1% APY, which is higher than the national average. They even have retirement accounts. You can now open a traditional or Roth IRA or both right on public. So your future self covered. And for a limited time, you can earn a 1% match on all your IRA deposits, IRA transfers, and 401k rollovers. If you want an investing experience that's both smart and simple, head to public.com slash money rehab. One more time, public.com slash money rehab. This is a paid endorsement for public investing, full disclosures and conditions can be found in the podcast description. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

Let me tell you a tragic story that I have heard way too many times now. 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. Even if there was a will, even if everything seemed in order. order, the bank can't help, the investments are locked up. Why? One word, probate. 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. 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 because the truth is losing someone is already incredibly hard. Your finances shouldn't make it harder. 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. 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. 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. 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. 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. Also, it's public, which means anyone can just look up the value of your estate and who got what, which is not ideal. 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. If there are disputes, debts, or missing paperwork, it takes even longer and gets even more expensive. 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. A will is like a set of instructions. It basically tells the court who should get what. It can name guardians for your kids. 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. 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. And that means your loved ones could be waiting months to access, even basic things like the money in your checking account. So if you want to keep certain assets out of probate, you need specific tools for that. And that's where Todd's, pods, and trusts come in. Pods, which stands for payable on death, and Todd's, which stands for transfer on death, are two of the easiest and most effective ways to pass on your money without going through probate. A pod applies to checking accounts, savings accounts, certificates of deposit. You literally just fill out a form for this at your bank. If someone has a pod, when they die, the money goes straight to their beneficiaries, no court involved. A Todd applies to brokerage

accounts, so stocks, bonds, and some retirement accounts, although IRAs and 401ks usually have their own beneficiary designations. So while they apply to different assets, pods and Todd's achieve the same goal. You name someone who gets the assets after you die, and it transfers immediately bypassing probate entirely. That's the part that nobody tells you. 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. Now, let's talk about trusts. Trusts are another powerful way to avoid probate, especially for larger or more complicated estates. 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. 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. And frankly, that's because they just sound very expensive and complicated. And setting up a revocable trust isn't nothing. 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. 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. 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. 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. 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. 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. Life keeps moving even after death. Life is not free, Unfortunately. 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. 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 Todd's, Pods, and Trusts. And that is it. We did it. We tackled probate, which again is not the sexiest topic on the planet. it's one of the most powerful and impactful money moves that you can possibly make. You work so hard to build your wealth. Don't let the court system decide what happens to it after you're gone. And by the way, if this episode sparked in, oh no, I have not done any of this moment.

Good. That is the whole point. 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. Here's a cheat sheet for your next step. for every account you own, checking, savings, brokerage, retirement, ask yourself these three questions. Number one, does this account have a beneficiary? If yes, is it up to date? If no,

add one. Ask your bank or your broker for a Todd or Pod form. Number two, is this asset in my trust? If you have a trust, make sure your house deed, your investment accounts, and any other significant assets are titled in the name of the trust. And three, walk through the asset, 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? And if the answer includes the word probate, make a plan to fix that. Don't assume your financial advisor, accountant, or a lawyer has done this for you. 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.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan LaVoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, money rehab at money newsnetwork.com to potentially have your questions answered on the show

or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.