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

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3:15Let 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, 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.

3:55Because 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.

4:37Now, 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.

5:20So 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.

5:58So 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. 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. A PODS 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.

6:42So 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. 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.

7:26When 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.

8:02I 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.

8:41To 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 tods, pods, and trusts. And that is it. We did it. 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.

9:24You 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 an 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 steps. For every account you own, checking, savings, brokerage, retirement, ask yourself these three questions. Number one, does this account have a beneficiary?

9:59If 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 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 lawyer has done this for you.

10:38And 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.

10:50Money 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? And let's be honest, we all do. 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. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork 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.

11:32Thank you.