Does life insurance go through probate?

If you’re the administrator of an estate, and the person who passed away had a life insurance policy, you may quickly realize that this was one of the most expensive assets that they owned. In fact, for many people, there is nothing that they have that is worth more to their heirs – at least, as long as you’re not considering sentimental value.

But do you actually have to deal with this life insurance policy in any way, such as distributing the money to the proper heirs or dividing it between different individuals? You’ll find that this process is often outside of your control as the estate administrator.

Are there prior beneficiaries?

The big question to ask is simply whether or not the person who bought the policy named a beneficiary at the time. The life insurance company will likely ask them to make this designation, and most people will name at least one person. They can also name multiple people, or they could do something like naming a trust as the beneficiary.

But no matter who they picked, if there is a beneficiary designation, then life insurance is entirely separate from the probate process. It just transfers directly to the individual who is named as soon as the policy is supposed to pay out. It never enters the estate of the deceased individual, and therefore it is not subjected to probate along with everything else that they owned.

There are cases where people have not chosen a beneficiary, or perhaps where the beneficiary that they chose passed away before they did. In these cases, life insurance will enter their estate and need to be divided along with the will. But things like this are rare, and it should not happen if the person has taken the time to plan in advance.

Working through probate

This is just one aspect of probate to consider, and the process can be complicated. Be sure you know exactly what steps to take at this time.

Archives