NerdWallet's Smart Money Podcast

Episode: Estate Planning Made Simple and How to Handle Family Loans
Date: September 8, 2025

Episode Overview

In this episode, hosts Sean Pyles, CFP®, and Elizabeth Ayoola, with guest Kate Wood, break down two crucial personal finance topics: estate planning and informal lending (family loans). The hosts share practical advice, actionable steps, and personal anecdotes to make these often daunting subjects more approachable. The episode offers clear frameworks, legal and emotional considerations, and tactical advice on setting up wills, selecting beneficiaries, handling family loans, and deciding where to save gift money for loved ones.

Main Topics & Key Insights

1. Making Estate Planning Simple

[02:35–13:54]

What is Estate Planning?

• Estate planning is a collection of legal documents that outline how your assets, health care, and guardianship of dependents are managed if you pass away or are incapacitated.
• Key documents include: trusts, last will and testament, living will, durable power of attorney, and advanced healthcare directive.

The Two Buckets of Estate Planning

• While Alive but Incapacitated: Documents that allow someone you trust to make medical or financial decisions on your behalf.
• After Death: Wills and trusts that direct the distribution of your assets and care for any dependents.

Why Estate Planning is Important

• Tangible Benefit: Reduces court involvement, costs, and conflict for loved ones during stressful times.
• Emotional Benefit: “Putting together your estate plan is really an act of love and compassion for your family. And for yourself…” — Sean Pyles [04:23]

Concerning Trends & Proactive Mindset

• Only 24% of Americans had a will in 2025 (down from 33% in 2022).
• Without a will, assets get distributed by the state (intestate), which is often costly and not aligned with personal wishes.

Personal Stories: Estate Planning in Action

• Sean: Created a will and advance directive after acquiring property out-of-state to protect assets and his partner. “It’s an act of care. We were doing this to support each other…” — Sean Pyles [06:21]
• Elizabeth: Set up a revocable trust for her young son to control asset distribution and avoid probate: “I wanted to include stipulations for when he can receive the funds… a revocable trust also means he could avoid probate…” [07:07]
• Both hosts found the process deepened their relationships.

What’s in a Comprehensive Estate Plan?

• Revocable trust (with clear asset re-titling/titling)
• Durable power of attorney (financial, medical)
• Living will and designation of a healthcare surrogate
• Last will and testament (naming guardians if applicable)

Three Simple Steps to Get Started

• Check & Update Beneficiaries: “Listing primary and contingent beneficiaries… can help you to avoid probate. Now, the beneficiaries… override what you put in your will.” — Elizabeth Ayoola [09:33]
• Create a Will: Even a simple will guides asset distribution and appoints guardians but should be reviewed by an attorney (especially if using a template or online service).
• Update Estate Plan After Life Changes: Marriage, divorce, births, deaths, or major career changes all warrant a review and update of your plan. Don’t forget to ensure the people involved are still appropriate.

Notable Moment:
Elizabeth shares, “In my will, I have that. I would not like to be buried in a graveyard. I would like to be cremated and planted as a tree. So poetic, isn't it?” [13:08]
Sean replies, “Yeah, I wanna be composted. That’s why I mentioned that mushroom suit.” [13:20]

2. Handling Family Loans & Informal Lending

[15:40–31:36]

Listener Question: Jenna’s Dilemma

• Scenario: Jenna’s parents paid $82,000 for her schooling at 3% interest, better than federal loan rates. Jenna wants to pay them back by saving $1,000/month for 6–7 years and surprising them with the sum.
• Main Question: What’s the best account to use for accumulating this money?

How Do Family Loans Work?

• Definition: Any loan from a person you know, not a financial institution.
• Benefits: Less red tape, lower or zero interest, more flexible terms, potential for quick funding.
• Risks: “The biggest risk really is to the relationship, right?” — Kate Wood [19:41]
  • Power dynamics may develop; missed payments can risk long-term relationships.
  • Repayments don’t build credit (since not reported to bureaus).
• Prevalence: Parents cover a significant portion of college costs (38% of college expenses in 2024–25 came from parents).

Lending Circles: Community-Based Lending

• How They Work: Group savings schemes where members “lend” to one another in turn.
• Can be saving or lending circles, depending on payout structure.
• Global Perspective: Elizabeth participated in a Nigerian “adjo,” a trust-driven lending circle; she highlights the importance of joining with people you trust.

Quote:
“My mom gave me advice that lives rent free in my head, which is don’t lend what you can’t afford to get back.” — Elizabeth Ayoola [29:08]

Guardrails for Informal Lending

• Always Get it in Writing: Formal agreements prevent confusion and protect relationships, especially for significant sums.
  “It can just state the amount, repayment schedule, how interest is going to be dealt with, and what would happen if the borrower fails to repay the loan.” — Kate Wood [26:37]
• Consider Relationships: “Really knowing that you could be putting the relationship at risk, but also if you trust this person, this could theoretically strengthen your relationship...” — Kate Wood [31:02]
• Borrow or lend only what you’re comfortable not recovering.

3. Where Should Jenna Save the Money to Repay Her Parents?

[29:25–30:52]

• Elizabeth’s Recommendation:

  • Use a high-yield savings account—safe, flexible, accessible, and earns interest (“they’d have about $98,000 after seven years”).
  • Risk: Rates can fluctuate; interest is taxable.

• Sean’s Recommendation:

  • Since Jenna’s time frame is medium-term (6–7 years), and not extremely short, Sean would consider a taxable brokerage account with a diversified ETF portfolio for higher growth.
  • Caution: Market risk and potential for losses, but may offer greater returns than savings.
  • Note: Sean provides a financial planner’s disclaimer—this is not specific investment advice, just a general approach.

Notable Quotes & Moments

• “Putting together your estate plan is really an act of love and compassion for your family. And for yourself…”
  — Sean Pyles [04:23]
• “...beneficiaries that you leave on your retirement accounts override what you put in your will.”
  — Elizabeth Ayoola [09:33]
• “Don’t lend what you can’t afford to get back.”
  — Elizabeth Ayoola (sharing her mother's advice) [29:08]
• “Always get it in writing when possible. I really, really, really hate when relationships end over money.”
  — Elizabeth Ayoola [25:55]
• “The biggest risk really is to the relationship, right?”
  — Kate Wood [19:41]

Timestamps for Vital Segments

• [02:35] Estate Planning 101
• [04:54] Why Estate Planning is an Act of Love
• [05:36] Personal Stories: Sean’s and Elizabeth’s Plans
• [08:56] The Documents You Need for a Solid Estate Plan
• [09:26] Three Steps to Start Estate Planning
• [13:00] Making Estate Planning Personal and Poetic
• [15:44] Listener Question: Family Loan Repayment
• [18:06] How Informal and Family Loans Work
• [24:26] Lending Circles & Community Financing Stories
• [26:33] Why and How to Formalize Family Loans
• [29:25] Best Place to Hold Loan Payback Savings (High Yield vs. Brokerage)
• [31:02] Considering Relationship Risks in Informal Lending

Final Thoughts

The hosts present estate planning as a vital act of care, not just a dour obligation, and break down family loans as a viable, often underappreciated way to fund educational and life goals—while warning of relationship pitfalls if not done carefully and transparently. Throughout, the advice is approachable, relatable, and rich with personal experience, making intimidating topics manageable for listeners at any stage.

For more money tips or to submit your own question, contact the NerdWallet team at 901-730-6373 or podcast@nerdwallet.com.