How to Skip the Probate Court

This is the Truth Network. Yeah. Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.

Now, let's get started with Finishing Well. Welcome to finishing well with certified financial planner Hans Scheil, and what a great, I mean, great show we have for you today. And I'm sure you're going to want to do this: how to skip. The probate court now. I laughed out loud for a little while after I heard.

Uh Hans set this up on the video. He said, you know, all of us escape probate court because we won't be there. And that's true, Hans. We won't be there. But the idea of this is to help your loved ones escape probate court and sitting down.

I've had a chance to experience probate court with my dad's stuff, and I can assure you, if there's a way to skip it, and there's so many different tools that you're going to learn in today's show. Interestingly, Hezekiah, one of the great kings in Israel in the Old Testament, as great as he was, you know, he had the prophet Isaiah visit him. And at this point, you know, the prophet Isaiah came and told Hezekiah, thus says the Lord, set your house in order, for you shall die. You know, that's what we're doing today is let's realize this is going to happen. Again, setting our house in order.

Like man. Do you believe that Jesus is the Son of God? Do you believe that God raised him from the dead? Do you believe that in your heart, right? And do you realize that he's Lord of your life and ready to follow him?

That's setting your house in order. And if you got that part right, right, then we can begin to talk about this probate thing. Right, Hans? Sure. Sure.

There's a simple way to take care of most things and it's of beneficiary designations Transfer on death on bank accounts and stock brokerages. or pay on death. on a stockbrokerage account. And those all have acronyms that define them but let's Let's get clear on this. Is that your IRA, and this is where a lot of people have their money, or your 401k.

has a beneficiary designation on it. And it also has a place for a contingent beneficiary. I can't tell you how many people. Um you know, have IRAs that I run into. And when I'm looking through there, their beneficiary is deceased.

And But they have a contingent beneficiary. And hopefully that contingent beneficiary is who they still want. And if it's not. Yeah. we're going to change it.

Because you can change a beneficiary any time. on an IRA or a life insurance policy or an annuity, So, the first thing I want to get across is a beneficiary designations or a transfer on death. or a pay-on death. completely bypasses The probate court. I mean, probate is not where you want your relatives to go.

They're going to have to go there for some things. And a lot of people try to dismiss the work we do. Oh, we already got our wills, we got that all done.

Okay. And you know what what I want to know is, have you matched your will to your beneficiary designations. And then You know, a lot of times when we do work for people and we get those will that they already got, we get that out. And we read that, and then we get all their beneficiaries on all their accounts. and their insurance policies, and we find a lot of discrepancies.

Yeah. You know, where they got different people, and I'm going to tell you. The beneficiary designation is going to win every time. is because it's never going to go to probate. I mean, people are going to get paid.

As soon as the death certificate gets into Um the Whether it's an insurance company or a mutual fund that has the IRA or a bank. Or a life insurance, as soon as they get a death certificate, they're just going to look at the beneficiary. designation in the policy and they're going to cut a check. I mean, it's that simple. Yeah.

Nothing goes through probate.

So, and if you have put down all your wishes in your will. and you've kind of ignored your beneficiary designations. Or you just have left them what they were years ago, thinking you changed them when you changed the will. I got news for you: the beneficiary designation. is going to win.

Yeah, I I remember First time we talked about this subject. I think I said probate was something I thought you got from Bass Pro Shops, you know? Yeah. That. Yeah.

But unfortunately Go ahead. You found out with your father soon thereafter that probate is nothing to give about. Oh, no, no. And. You know, it you have to meet with the county of wi and go through all these different assets and provide them with all these different inventories and all sorts of different things.

And so the idea of of the neat thing about stuff that y you know, passes by beneficiary of life insurance and IRAs and those kind of things is when they're out of the equation, boy, it saves you a lot of headache and and them a lot of headache as well. But as we talk so many times, man, Um It's really a good idea if you've looked at it almost every year to go in and look at your beneficiaries on that IRA. Because man, like you said, if you had an ex-wife or you had... Another situation that in your life that man, those things change, and it isn't going to matter what's on the will. What's going to matter is on your beneficiary statement on that.

IRA or on that life insurance policy. Let me give you an example of somebody I'm dealing with right now. I mean they Um This guy is not going to make it more than a year or two or three. Um without getting into details and He he his first wife passed away like 25 years ago, and then this couple's been married for like 20 years. And so they have no kids together.

Um he's seventy-seven. Uh the current wife is 65. And so Um all the stuff that he brought into the marriage is still in his name.

some of it still in his wife deceased wife's name. Jointly on there. And um So You know, they were real upfront about that. And then I asked them who the beneficiaries On his two IRAs and he said, oh, it's the new wife. And um And then the contingent is his daughter.

And so, you know, I kind of take that all down. And then we started getting all the documents, and we spent. the last month. digging into stuff and changing stuff, but If he'd have passed away before they ran into me, this would have been a... a huge mess.

Because The beneficiaries on both his IRAs are still the deceased wife. And so Um His will That Um The new wife is so he remade a will like 20 years ago. And then she made one. But the problem with that is the daughter is still the contingent beneficiary. And he needs to leave his money to the wife, she's going to need it after he passes away.

So I don't want to get too much into the details of this thing, but it's a mess. Then you know, we we get into their lake house. Which is it? I mean they've had it for like 40 years. It's only in his name.

Yeah. probably paid like $100,000 for it and it's worth like $600,000 now. Yeah. If they sold it now, because he was saying, Well, we'll just sell the lake house if we have to take care of his bills and that kind of thing. They're going to have a huge tax bill.

of capital gains on The lake house. Yeah. I don't want them to sell the lake house until he's deceased.

Okay, and because I don't At first I was thinking we're going to add her name to it. but we're going to get a full step up in basis. on that one hundred thousand to six hundred thousand She's going to pay like no taxes on the capital gain. after he's passed.

So The the answer was we we we set up a trust for them. And in his name. Yeah. put him where in the trust It's going to go to her. as the wife Yeah.

Anyhow, I don't want to get too much into the details, but people, a lot of people that have substantial resources and they own property and real estate. In IRAs, Yeah, he owns some stock. They all think it's going to work one way and Especially when you have second marriages involved. It can be a mess. Yeah, I hate to even think like, wow.

And and again, it's. you know, stuff just gets done and unless you go back and actually look at it. which I've done and I'm like, oh my good my my goodness, th this is not I didn't have the secondaries and stuff that I thought I had on this. I can't believe I didn't do that. But I didn't.

And. So it it's definitely worth it, whatever time it takes to go, you know, check that out, or even better, you know, get the whole package to Hans to where y you can begin to review it like you did for them. And that's. Because you guys are looking at everything in their plan with this idea in mind that because you guys have had so much experience with dealing with people like this. I mean, that's what I've been telling them because they keep apologizing.

Man, we had no idea. And I'm sorry, this is don't apologize. I mean, this is how I make a living. God sends people to me. Uh because he knows that I have experience with this and I I sort of expect this instead of expecting to find it perfect.

or even close to perfect. And so we just set about the business of getting everything out. And then the places we couldn't read in documents, we got on the phone and we called. the institutions and we got him on the line identify himself i start asking questions they send stuff by email It it's actually once I have their cooperation, it really not that difficult to um rearrange everything and then we needed to sit down and say, what do you want the daughter to get? I mean what what Because some of this Needs to go to her.

I mean, that's the desire.

So then we just figured out what that is, and we just took care of it in a beneficiary.

So it's just written in their new stuff that they have posed to us. Yeah, and in that trust. That she gets a certain amount just immediately after he passes, and then the bulk of things are going to the to his wife, who's 65 years old and may have lived to 95. We got to look after her. You know, at cardinalguide.com, they have the seven worries tabs.

And so, as you look at those, one of those is your estate and getting your stuff in order.

So, we got that. And if you go to that. Ori tab, you're going to see videos along these same lines and all sorts of show notes and all sorts of stuff of previous. Radio shows all on this idea of estates, and so what a resource it really is there on this whole idea of getting your house in order. Again, with this show, same idea, only with a video aboard, a lot of stuff that you can look at.

Well, some of the other things we're going to talk about in a few minutes. And so, we want to remind you also that there at cardinalguy.com, you're going to find Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement, and the wonderful workbook that goes along with that, and the ever-famous Contact Hans and Tom page. And so, we come back with a whole lot more of lifetime income and excuse me. when we come back a whole lot more, how to skip the probate court. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM.

A registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.

Well, welcome back to Finishing Well with Certified Financial Planner Hans Scheil and today's show: How to Skip The probate court. And boy, do we need that.

So, Hans, carry on. Yeah, so let's just talk about probate. I mean, what I had, you know, first of all, it's a court process. And anybody that's been to court before or dealt with a court There's delays and putting off and it's just There's fees. And it's just whatever the judge decides we're going to do.

whatever the you know, if there's some attorney opposing what you're trying to do or some Air, it just takes a long time. I mean, it's just going to be delayed, especially if somebody's opposing it. You gotta pay money for it. The nickel and dime, it's in the public record. That's the other thing, is that anybody and their brother.

And go look. and see what's going on with your money, who you paid, who you didn't pay. Um who you left out of your will, and a lot of folks don't like that piece of it. Um It's subject to creditors. I mean, creditors can come in and Say he owed me money from before, and I want to take it out of the state.

It's subject to. Airs challenging. I mean, I just thinking about this daughter, I I I In the case I was just talking about in the first part of the show. I mean, I've kind of acted on her behalf. just saying that we need to make sure we take proper care of her.

and tell her that. Um so that we head off any challenges, because she could she could be bitter after he passes away and she finds out everything's going to what amounts to her stepmother. Um Probate is something that you have to deal with typically with some of the assets. Um but you want to keep as much out of there as you can. And beneficiary designations are going to bypass probate.

And then let's talk about transfer on death. A transfer on death. is something that's on any bank account. But A lot of times the banks don't offer this. I mean, they just.

You almost have to ask the banker that, and I for all of you that have bank accounts, I mean if you're husband and wife and it's a joint bank account, well then it's pretty simple. When you pass away, Whichever one of you passes away, the other one just owns the account. But then when that second one dies, A lot of people add their kids onto the account just so they can kind of avoid probate or make it easy, but There's a situa I don't want to get into that today. There's a better way is you can Put a transfer on death. You can just name your kid, or you could name all three of your kids.

where they're just going to transfer this account Into their name. upon death and it completely avoids probate.

So Ask for that at your bank. For now. When we're talking about beneficiaries, I see this a lot: people just. Years ago, they put down the estate. as the beneficiary.

They're taking something that's meant to avoid probate and putting it right into probate.

So when you name the estate as your beneficiary, you're just taking Whatever the piece of money is, and it's going to go right into probate. And it's your will is going to drive it.

Okay. Yeah, absolutely. And I you know, to me that always just amazed me, like, really? I had no idea that you could do something at your bank.

So it could be so easily just transferred without going through all that stuff from probate. And yet so few people understand that, really. There are times when I have to educate bankers. I mean, when people come to me, we go through all this stuff. I mean, we're just going to go through and we're going to prepare that one of you is going to be gone.

And then there's, you know, at some point. and one's going to survive. And then that one that survives, we're preparing for that time. And then we're preparing for the end when that one passes. Um What's going to happen?

And we do most of this with beneficiary designations and transfer on death. and pay on death. on some of the uh brokerage and stock brokerage accounts. Um Uh But it has a name, and if I got to talk to somebody on behalf of one of my clients, I do. But those bankers know how this works.

It's just more paperwork for them.

So typically, when you open an account, They're not like life insurance people like us. We go through all of this stuff. They're not going to typically do that unless you ask. Um Now understand I said this before is that the beneficiaries are going to be paid before the will is even probated.

So I mean, they just are. You get a death certificate into them in a claim form. And a lot of these places will fill that out over the phone, and they'll verify with the beneficiary. Um I mean, it's the money's going to who's named. Um You need to be sure and update these when there's Marriages, divorce.

Births, deaths, I mean, you know. This guy would have been in a real pickle. With Or he wouldn't have been in a pickle because he's deceased. I mean, it was just she would have been in a real pickle and the whole family would have. Because You know, the the having The wife, who died twenty five years ago, named as the primary beneficiary, which you would have had to do in probate is you would have had to prove Two The um Institution That has her named as the beneficiary that she's deceased 25 years.

So you'd have to get an old death certificate. which I've done many times, and then you get it to that institution. And then if there's a contingent beneficiary, that's all there is to it. Then they pay the contingent beneficiary. But a lot of people that left that, they don't have that.

And so now it's going to become the estate.

So it's going to go into probate.

So you need to update these beneficiaries. And again, when we do financial plans for people, we get everything updated. Um And the beneficiaries, you need to update their addresses and phone numbers. Because this institution needs after you die, these institutions need to be able to get a hold of the beneficiaries. And my guess is that the information that's in there is old.

A lot of these you can do them online if you have an online account. You can go in and update all this stuff. Um Yeah, it's how I did it. You can go right in. Easy.

and look at all your your beneficiaries and contingent beneficiaries and and and, you know, pray about that. Think about God and w you know, is this still what I want? And f and present time. It's real handy. All the time.

I mean, I have clients coming into me that go online all the time, and they're really checking their balance. doing distributions But they're checking their balance, checking their balance again. Yeah. They don't ever go into the beneficiaries. And just next time you go in there, go in there and look and see who the beneficiaries are.

Read each one of them. And then look at their primary information and I'm sure you have that down. It's just Get it.

So Let's move on to something else.

So, we want to talk. a bit about real estate because real estate You you can't put a beneficiary on real estate.

Okay. Um Now, if you're in one of these states, and I have them listed in the video, I'm not going to do them here, but you know, it's about 20 some states have what's called a beneficiary deed. and North Carolina is not one of them. We do business all over the country. We're licensed all over the country, and in places where they're there's such a thing as a beneficiary deed.

you can write a beneficiary right onto the deed. and it'll pass without probate.

Now that's one way to do real estate. Yeah. Um important because Again, if all you got left is the real estate passes through the will, then that's going to put in probate. It's going to take a long time. Yeah.

There's a way around that. And we did this for this fella. I'm not a big fan of truss. But given the situation, we started a revocable living trust for him. And we arranged the attorney and She set it all up.

Yeah. Um all of their real property of this couple that we were talking about is now in a trust. Yeah, it didn't really cost that much. It's in there. It's still in his name because it's a revocable living trust.

And one of the reasons we did that, instead of just adding her name to all the deeds, is we want to get that full step up and basis after he passes away so we're not having to pay tax on the gains. Yeah. It also is going to make things Because she's a trustee. of the trust owes he, Yeah. She's going to be able to just.

go in there and then she can do whatever she wants with it, transfer it into her name. Um Leave it in the trust. because it's really in her name in the trust. She can sell it. Um So it's another way kind of the final step.

of putting everything with beneficiary designations transfer on death. Pay on death. When I say everything, You know, again. We ran into a little trouble with the titles. These people have a have a new boat that they purchased uh a year or two ago.

And so We needed to get the Wife's name added to the title. And then cars. Because that'll end up in probate or you're going to end up doing something. with the DMV that you don't really want to do. But my goal with these folks is to completely have them completely avoid the probate process.

and to just have everything transfer. relatively quickly after he passes away. and everybody gets the right amounts and they all live happily ever after. Yeah, my mother had a great saying, I've never forgotten it, of the way she handled so much of it. at the end of her life, talk about getting your house in order.

She said, Do your giving while you're living. And she literally did her best to get it all distributed, all in everybody's hands, the cars, the real estate, y well, not the real estate, because you you need the step up and basis, but um and but she didn't do it that way. But um But the cars and the and the this and the that, you know, give your giving while you're living. I love it. Yeah, and uh you know When we're doing planning for people that are 65, We also can use life insurance.

I mean, life insurance has a beneficiary. Ian. These people have enough money and things that they don't really need life insurance. and we can't write life insurance on him now because of his health. But when I'm sitting down with somebody else that's not in their situation.

And we're planning all this out, and they want to make sure the kids get a certain amount, especially in these. second marriage situations. You just write a life insurance policy and make the beneficiary or maybe Maybe he wants to leave a bunch of the stuff to the kids, but he wants to take his new spouse, or newish spouse that not his first spouse. and make sure she's taken care of life insurance so you make her the beneficiary. It just passes, nobody sees it.

Um So Annuities the same way. We can take a bunch of money and put it in an annuity and make the kids the beneficiary. Yeah. or and again it'll just pass quickly So there's lots of ways to do this how do they skip the probate court thing. Um Yeah.

Yeah, we just made a video on it. I could talk all day. Yeah, we can send you right to cardinalguide.com, and you can find all sorts of different resources to do that. If you go to cardinalguy.com, there's a seven worries tab. And again, today we're talking about the estate.

And, of course, more information in Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement, and the Contact Hans and Tom page. It's a great show. Great show, Hans. Thank you and God bless you. God bless.

The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results.

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BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.

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